Savings isn't enough. Along with income generation, one needs to plan for creating wealth simultaneously. Individuals should not interchange the term income generation with wealth creation.
Income refers to earn money with regular intervals which can be in the form of salary, fixed deposit return or SIP. With long term objective, one needs to look at creating wealth along with income generation.
Wealth is considered by taking the total market value of all your assets and reducing debts if any.
One can earn income, but only his wise investment decisions and investing habits will help in generating wealth.
Here are 6 financial habits that can make you rich.
This should be the first step of any initial investor. With money involved in it, one cannot afford to make mistakes and learn.
Before investing in any of the financial product, understand the concept and risk associated with the product.
Individuals who are keen in creating wealth can develop the habit of saving more and than earning.
Avoid getting into Debt
Debt can really weigh on your investment and also on already created wealth. Go or it, only if it is necessary. Avoid taking loans for luxury related things.
Debt is good only if it will is used for another asset purchase like a home and you are able to make more returns than interest paid on such debts.
Have a Plan
Nothing can be achieved unless there is a plan. The plan is necessary to know where you are heading. Listing out your financial commitments and your financial goals will help you know where you stand financially. However, a plan should be dynamic, should change along with environment and wisdom.
Asset allocation plays a vital part in creating wealth. Asset allocation should be done wisely such that it should reduce risks and provide a better return.
Asset allocation can be done based on your risk profile and financial commitments. Young individuals can make maximum out of by investing most of it in equities giving better returns than inflation.
Choose the right advisory
Creating wealth needs a lot of efforts. Feel free to discuss the same with wealth advisors. As they will have better knowledge and experience in the field. However, it is up to you to decide on the product. If you have better understanding on the product, you can make better decisions.