Money - Wealth Creation Guide

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Returns from the investment helps maintain the purchasing power at a constant level. If you don't beat the inflation rate you'd be losing money, not making money. Retirement corpus creation - A person should invest while he is earning so as to create a corpus of funds that can be used when one retires. This retirement fund accumulates overtime and provides security to maintain a comfortable life-style even after retirement.

Accomplish financial goals - Investing can help you reach bigger financial goals. This return on your investments can be used toward major financial goals, such as buying a home, buying a car, starting your own business, or putting your children through college. Tax-saving - Some investment vehicles give a double return by providing returns as well as reducing your taxable income, which in turn minimizes the tax liability such as equity linked savings scheme ELSS funds. Money saved is money earned which can be invested further.

Here are Some Simple Guidelines for Building Long-term Wealth

High-returns - Investing would help to achieve high returns as compared to bank's saving account which provides a mere 4 per cent return. Investing in markets could provide you returns upwards of 20 percent if given the right time horizon. Whether you are making an investment in equity in the stock market, real estate, government bonds or any other financial instrument, there are these two factors your investment is guaranteed to have; risk and return.

Quite simply, risk refers to the probability of incurring losses relative to your investment.

How to Build Wealth

No investment exists that is completely risk free. Return measures the actual gain or loss your investment generates. While the word return is most commonly associated with a gain, it is perfectly possible to have a negative return, obviously indicating an actual loss on your investment.

The tradeoff, conceptualised by the graph above, is quite simple: investments with higher risk are associated with greater probability of higher return, whilst investments with lower risk have a greater probability of smaller return.

Concluding Thoughts on Building Wealth Fast

Young investors should have high proportion of equity in their portfolio as their risk taking capacity is more. Older people who are close to their retirement age should not invest in equity but should look for fixed income instruments such as bonds, debentures and government securities as they would provide a steady stream of cash flows with least possible risk. Equity - Stock investments represent equity ownership in a publicly traded company.

Companies issue stock as part of a capital raising regime which funds the operations of the company. Stock investments have varying growth prospects and are typically analyzed based on characteristics such as estimated future earnings and price-to-earnings ratios. Stocks can be classified in various categories.

Stocks may also offer dividends adding an income payout component to the investment. Fixed Income Instruments - Bonds are one of the most well known fixed income products. They can be offered by governments or corporations. They are also issued as part of a company's capital raising regime. Bonds pay investors interest in the form of coupon payments and offer full principal repayment at maturity.

Bonds are typically rated by a credit rating agency which offers insight on their capital structure and ability to make timely payments. Preferred Shares - are optimal alternative for risk-averse equity investors because these are shares of a company's stock with dividends that are paid out to shareholders before common stock dividends are issued. If the company enters bankruptcy, the shareholders with preferred stock are entitled to be paid from company assets first.

Most preference shares have a fixed dividend, while common stocks generally do not. This is why we provide an extensive range of services, plus the ability to tailor solutions based on your specific needs. Your wealth should work in all the ways you want it to. Tracker funds and exchange-traded funds ETFs are investments that aim to mirror the performance of a market index. Investment trusts are a well-established way of investing.

If low interest rates continue to remain, it really matters where you invest your money. Asset allocation depends on your goals, your attitude to risk, your capacity for loss and market conditions. We take a unique approach to wealth creation that centres on objective and pertinent advice, driven by intelligent and trusted relationships.


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The Unconventional Guide To Wealth Creation

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