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Wealth Accumulation Tips
Personal Wealth accumulation is simple mathematics. It is not something like a rocket science. Savings, Time and Returns are the three pillars of Wealth Accumulation.
Savings - It is how much you are able to set aside from your income. It depends on the amount of income and the amount of expenditure. Cash Flow analysis will help you to control your expenditure. If your cash inflows are more than your cash outflows then you will have surplus cash with you which can be invested.
Time - You should give enough time for you to achieve your goals. Fixing unachievable goals - like achieving a savings of one million in one year - will demoralise you. Fix a time frame which you can meet based on income, expenditure and the surplus that is available you. Start saving early. You can easily achieve substantial savings with little surpluses when you start to save at a young age, when you get your first pay check.
Returns - It is the rate of return you get on your savings. It is usually high when the risk is high and low when the risk is low. When you keep your surplus with a bank in the savings account or in a fixed deposits you get less interest. It is because you hardly carry any risk and you can draw your money any time. Whereas investments in shares, stocks and mutual funds give you higher return but the risk is also higher. Chances of losing your savings are more when compared to savings kept in the bank. In the initial stages when you are just starting to earn it is advisable to park your surplus in investments that carry less risk. When you gain experience and have accumulated a substantial savings you can consider investing in mutual funds or shares. Click here to know more about how to invest in shares and mutual funds and to know about the extent of risk that is involved.
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