How to grow Wealth
How to grow Wealth
Take following steps build & grow your wealth
1. Increase Your Income
Whether you’re just starting or in transition, having multiple income streams is the most fundamental step to building wealth. There are some of the ways you can increase your income and build wealth fast.
a) Venture into Business
The wealthiest people in the world are not employees working for someone but business founders. Entrepreneurship fulfills two aspects of wealth building: income and high returns on accumulated wealth. Therefore, if you have a “business idea” that can increase your income, get started. It doesn’t have to be a huge business. You can start a small business and offer the manufactured or traded goods and/or services you’re good at. With the emergence of the internet, you can create an entirely online-based digital business or services. If you’re busy with other things, you can hire people to run the business for you.
b) Take Up High-Paying Jobs
You can ascertain how you can get the high-paying jobs. Good examples of professionals paid highly include CXOs, Vice Presidents, Directors, and Managers etc.
However, some of these professions are very expensive. They may also take a lot of time to complete the requisite coursework, and it can be even longer before you start earning a high salary. You should consider all these factors before picking a profession. Whichever career path you choose, make sure it doesn’t leave your debt levels too high.
c) Run Side Hustles
Even if you have a job, you don’t have to only rely on your paycheck. You can run a successful side hustle to increase your income. You can turn your talent or hobby into monetary value during your free time.
There are many lucrative side work which you can run online. These include:
· Working as a virtual assistant, Consultant, Subject matter Expert
· Assisting in preparing Project Report, IPO Document etc.
· Freelance writing and editing
· Investing based on your own Research based on your subject matter expertise for short or medium term
· Regular online Stock or Index trading using F & O products
· Online tuitions, coach
· Web design, app development, coding, etc.
Other side hustles that don’t need internet access include:
· Part-time professor, academics
· Freelance expert, tax advise
· Becoming a Representative for foreign customer/supplier
· Be a Faculty or address Seminar, Conferences on regular basis to gain recognition in Industry
d) Improve Your Skill Set
There are 2 ways you can grow your income and investments in returns. You can either lower your expenses or increase your income. Most people focus on the first, forgetting the latter. You can increase your income by honing your skill set. This could include getting a higher or additional complimentary degree, an MBA or a special designation like PHD, which can all earn you a promotion and salary increase.
2. Save More
Saving money is another crucial step in building wealth. Once you have enough income to cater to your basic needs, it’s time to save. Remember, saving small amounts regularly compounds to substantial wealth over time.
a. Create a Budget
A budget is your financial plan, with expenditure estimates versus your income. A budget is an important tool in wealth creation. It gives you a view of your expenditure — the things you can cut on to increase your savings. To maintain a feasible budget, it is advisable to create a new one periodically. Can you imagine a sailor without a compass? That’s what a person who spends their money without a budget is like. Such a person will likely eventually suffer a devastating financial crash. One of the most popular and effective budgeting techniques is the 50/30/20 rule. This method suggests that 50% of your income goes to essentials, like food, rent and healthcare. 30% allocation goes to non-essentials, such as shopping and luxury activities. The remaining 20% is the most important allocation, which should go to savings.
b. Build an Emergency Fund
Emergency fund kits prepare you for unexpected events, like losing a job or medical emergency in the family. Such occurrences can disorient your wealth-building without emergency funds. Two common outcomes are selling the investment or incurring debts. If you incur debts, your wealth starts diminishing. Also, you’ll have to pay interest for the debt. If you sell your investment, you lose the capital and interests you would otherwise earn. So, to avoid such scenarios, build an emergency fund as your backup money to settle surprise expenditure.
c. Live Below Your Means
Overspending can dramatically impact your ability to build wealth. Cut spending on unnecessary things like eating out, buying designer clothes and regular vacations. While being frugal can be boring and unsatisfying, you’ll amass wealth over time and find it rewarding.
Once you’ve set aside a monthly saving goal, it’s time to invest. When you invest your money, it gives you more money in return. Investing your income in the stock market, and in real estate and retirement accounts, can build you massive wealth over time.
a. Stock Market
Buying company shares is one of the best and straightforward ways to build wealth. Through shares, you become a shareholder, owning a piece of the company. Buying stocks through exchange-traded funds is a transparent and risk-free form of investment. Invest in your technical area of expertise & domain knowledge and avoid tips from brokers and market participants. Even though stocks are much riskier compared to other assets, they have the best return on investment. With a well-informed diversification strategy, you can lower the risks and maximize the returns.
b. Real Estate
Investing in real estate investment either singly or in partnership with likeminded friends or family members or REITs gives you a chance to profit from the real estate industry without direct involvement.
c. Retirement Savings in PF, PPFs, Superannuation & Annuities
These products help you build your Wealth in a systematic way and most of these are tax efficient.
4. Wealth Creation
Many people earn as much money as you can, pay the bills, spend the rest, because that is how much it costs to live. This plan and way of working will only keep you working hand to mouth and keep you on the treadmill until you die. Wealth can only be created by not consuming, so we need to stop spending and create the habit of saving. Therefore you need to look at your right hand column to see where you can stop consuming. To be successful at this you must have an honest desire to create your own wealth and the determination and discipline to change your lifestyle so it's imperative you know what you want and why you are doing this.
Laws to successful wealth creation
· Spend less than you earn,
· Invest your surplus wisely (at least 10% of your income), and
· Leave it alone so it can grow.
Building wealth is not a rocket science process. With dedication and discipline, you can grow your wealth fast. Before starting on this journey, it’s important to equip yourself with financial education. That alone should catapult you through the other steps seamlessly and eventually build wealth. Many people overlook retirement accounts when it comes to building wealth. You’ll not only save for retirement but also grow your wealth over time.
CA Harshad Shah, Mumbai (email@example.com)