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Important Steps to Wealth Building
Wealth creation is a time consuming, easy to understand and very difficult to implement process. There are no cut fast rules on how to create wealth.
Wealth Building Rule 1. Understand the Power of Compounding: it looks odd to realise that the power of compounding is NOT taught well at school! They give you some simple examples — rarely are you taught the POWER! Even people working in financial services do not appreciate the power of compounding. Ignore this only at YOUR OWN RISK.
Wealth Building Rule 2. Understand the Power of NOW: LEARN the power of starting to compound as soon as possible in life. If you have not understood, NO TIME LIKE TODAY..pick up the pen, call the advisor, click on the net — whateva…just start, NOW, TODAY.
Wealth Building Rule 3. Understand the Power of Regularity — start a SIP AND make sure you do it regularly — not missing a single month. If by chance you do miss a month of investing, immediately pick up a cheque and send it in! At the end of a YEAR you should have invested 12* Amount being invested every month. If suddenly you have money, top up the SAME account.
Wealth Building Rule 4. Understand the power of Not Touching the Money for 'n' years: Capital and Wealth creation needs long periods of growth. If you do not touch the money for any sundry purpose, leave it untouched. This helps in compounding. REmember this for life!
Wealth Building Rule 5. Understand the power of LEARNING: If you are willing to wish to invest in equities — directly or through mutual funds, learn as much as possible about equities. Invest in learning, before you invest your money.
Wealth Building Rule 6. If you do not (or will not) learn about equities, never mind, learn the power of indexing in equities!
Wealth Building Rule 7. Learn simple things like keeping your accounts in an excel sheet and keep track of the paise….the rupee will take care of itself. Track your income, collect all monies due, track your expenses, track your investing and returns.
Wealth Building Rule 8. For events which you know invest. For sad events which MAY happen,insure. You never know….
Wealth Building Rule 9. Remember delayed gratification may not be easy, learn it. Food which gives 30 seconds of pleasure on the tongue stays in your waist for 30 years. I understand this….but when I see a sweet I still fall for it. Knowing and implementing are completely different animals. Alas!
Wealth Building Rule 10. Invest in education, training, health, travel and fun. Very important to remember do not forget the present for doing something great in the future. The future is important, but the present is vital.
I never attempt to make money on the stock market. I buy on the assumption that they could close the market the next day and not reopen it for five years--- Warren Buffett
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