We all strive to become rich, create long term wealth, and live a happy and peaceful life. However, at times, we lack the proper motivation, the right information, and the plan required to reach our financial goals. And hence we look for a personal financial advisor. There are some golden rules that will always be relevant to your wealth management irrespective of your financial goals.
1. Know your real worth
This is the first step to create a solid financial plan for yourself. When you know your net worth, you also know your assets and liabilities. It offers you a snapshot of your financial position at a given point in time. Knowing your net worth allows you to confront the realities of your current financial situation. A review of your net worth helps determine where exactly you stand. It shows you the path of where you want to go in terms of personal finance. It also gives you a wake-up call if you are not heading in the right direction. If you have trouble determining your net worth you can always consult a mutual fund advisor in India online or offline depending on your convenience.
2. Spend less than your income
It sounds like very old advice, but as they say, old is gold. To create wealth, you must have surplus funds to invest in the market. You should not simply exhaust all of your monthly income on pleasure instruments. We are not suggesting you be overly frugal, but have a cautious approach while spending your hard-earned money. Keeping track of your monthly budget is an excellent way to start.
3. Invest wisely with proper knowledge about the product
You need to have leftover funds to invest in. However, there are so many schemes and products on the market to invest in. Do not gamble your hard-earned money on products that are difficult to understand. Decent quality of assets can offer you capital growth as well as income. You need to consider your risk limits before investing in any financial instrument. It is recommended that you should speak to a wealth management company in India for an organized wealth management plan.
4. Don’t put all your eggs in one basket
This is an old saying, yet it is very appropriate while investing. You need to keep a standard variation in your asset allocation. Diversification of your investments has three key advantages:
- It minimizes the risk in your investments with diverse asset allocation.
- It helps you to preserve the capital and protect your savings.
- It removes the dependency on one source of income and helps you generate returns through other investment channels.
5. Be patient
Investments are always subject to market risks. It is important to not panic with the slightest fluctuations in the market. You need to trust your investments, have patience, and give them time so that it can settle and mature. Patience will ensure that you get the best returns for your investments. In case of market fluctuations or when you are worried about returns on investments, it is advisable to speak with your financial advisor before arriving at any hasty decisions. Always remember, volatility is an integral part of any investment and can be tackled with patience.
6. Monitor your investments periodically
Patience is good for any investment. However, only patience will not help you generate great returns. You need to keep a regular tab on all your investments. It will allow you to find out which investments are performing and those which are not. It will help reshuffle your asset allocation, to get the best returns over a period of time.
7. Be safe, be insured
You can never be sure of what life has planned for you. It is imperative to have proper insurance cover while creating wealth. People purchase insurance to save taxes or as an investment or both. However, you mustn’t mix your investments and insurance. First, you need to have the proper coverage that will take care of your family and you in case of any emergency. Next, choose those insurance policies such as endowment or child plans that will help you reach your financial goals. In the end, buy plans such as unit-linked insurance policies (ULIPs) that will help you create wealth.
8. Plan your taxes
One thing is certain in finance: taxes will never go away. The rules, regulations, and tax brackets will change according to time, however, taxation itself will remain. It keeps affecting your finances in every aspect. You need to have a strong approach in terms of dealing with taxes. Don’t wake up when it is the final week of filing your returns. Plan your taxes well ahead. Consult with a financial planning advisor who will guide you to make the necessary investments that will provide you a tax benefit. Planning your taxes will not only save you from the chaos and hasty investment decisions, but it will also help you save money.
9. Plan for retirement
Retirement planning is an important part of your wealth management plan. You have to make sure that all the wealth creation ideas must be in line with your retirement too. You need to invest in such a way that even after your successful professional life, you can have a steady source of income and continue building up wealth. You can also avail of certain tax benefits. More importantly, you will have that peace of mind that you were always looking for!