“My poor dad often said, ‘I’d rather be happy than rich’. My rich dad said, ‘Why not be Both’?”- Robert Kiyosaki
Historically, people have always been categorized into Rich and Poor. Wealth inequality in India has been going on for the past decades! Now over a few decades, there has been a development of a new category called the Wealthy!
But remind you, there is a fine line between the Rich and the Wealthy! Rich people are more focused on creating wealth and spending it on having a lavish lifestyle. It doesn’t mean that wealthy people don’t spend, they do but their priority remains to make INVESTMENTS!
Shockingly, some people are not that rich but again are much wealthier than the Rich, why? Because they focus on creating more wealth with investments and fulfilling their financial goals!
In this blog, we’ll be discussing the mentioned topics below:
- What is Wealth Creation?
- The Importance of Wealth Creation
- How to Plan for Wealth Creation?
What is wealth creation?
Wealth creation is more than just earning money. It is saving your money and investing it that further escalates your wealth as a parallel stream of income. The amount you save and invest by aligning them to your financial goals to grow your wealth simply means wealth creation!
The golden investment rule is to give it time. The more time you stay invested the more wealth in the form of returns you’ll accumulate. You might think why go for long-term investment for wealth creation? Well, the answer is simple, the more you wait the more you’ll maximize the benefit of COMPOUNDING.
Now you might not have a lump sum amount to invest but with mutual funds, the facility of SIP (Systematic Investment Plan) can help you to invest a small amount at regular monthly intervals. Start with a small amount, then increase your wealth creation goal, and start investing more amount, as your income increases.
Following a disciplined way of investment can bring you closer to achieving your financial goals & financial freedom!
The importance of wealth creation
Coming from the Legendary investor himself, Warren Buffett, always said, “If you don’t find a way to make money while you sleep, you will have to work till you die”. With this statement, he states the necessity and importance of wealth creation in our lives.
The ability to generate wealth passively by investing money that has been earned previously is what an investor should have a steer focus on!
What our destiny harbors for us, is a thing we can’t envision. Thus, financial planning here plays a very important role. The purpose of wealth creation is to grow your money whether for a short, medium, or long-term financial goal.
Goals that generally last for 3 years or less than that are believed to be short-term goals. Planning a vacation or buying the latest expensive electronics etc, could be a short-term goal.
Goals that last for 3 years to 5 years are perceived as medium-term goals. This could be saving for a new vehicle or a downpayment for a new house etc.
Goals that are extended for more than 5 years are long-term goals. Retirement planning or say planning for child education can come under this category. Long-term goals can extend for not only years but even decades.
Focus on the time horizon for your financial goal as this is what helps in achieving wealth creation at its best!
Not only this wealth creation offers a steady flow of income even when you are no longer employed or working. Wealth creation ensures financial liquidity that will help you to live comfortably with financial security, especially during your retirement years.
Also Read: What is Wealth Maximization in Financial Management
Retirement is the most precious and challenging phase with increasing medical and daily expenditures. Nonetheless, with wealth creation, your retirement phase will not face an experience of a financial crunch and thus you can be independent for as long as you live!
BOTTOM LINE:
In life, we dream of many things that we believe are impossible for us to achieve due to not having enough money. This saying is true, that wealth cannot be created in one day, but given a few years, it can be created!
Invest in your financial goals effectively and create wealth!
