What is the most reliable and safest way to build wealth?
invest19 last edited by ftForumMod
Well, if you’re looking for wealth building investment options then based on my assumption that your goal is to achieve financial freedom. If that’s the case, my only answer is, invest in stocks. Whether you invest directly in the stock market or invest through equity mutual funds. Either way, you can reap the benefit of high returns received in stock investing.
But, knowing the investment option is not enough to build wealth over time. Many investors succeed to make wealth with just fixed income deposits, debt funds, and bonds. What you need to know is how you can structure your savings and investments in a way that can help you to build wealth over time.
Financial independence is a stage where you no longer need to work for money only if you’re interested. And you’ve enough finances saved and invested that allow you to maintain your lifestyle even when you are not working. Financial independence can help you achieve your dreams and goals that once impossible.
But, to live such a life, one has to follow a strict disciplinary approach and implement it within your lifestyle. For instance, you need to start tracking your income, expenses, and savings. Create a budget plan that allows you to handle your expenses and still come out with enough funds to make investments for future goals. In doing so, you also need to clear off your debts which may stop you from achieving your goal of building wealth.
Once you are done with all that you should create a short-term emergency fund in case of any unfortunate event or unexpected expense. By having an emergency fund, you can ensure that your long-term investments won’t get interrupted by short-term expenses.
After this, you can start looking for investment options for long-term investments. As I mentioned earlier, direct equity investments and mutual funds is a great way of wealth building. You can select from the stocks and mutual funds and decide which one can give you better returns in the future. Make sure to pick one that helps you in achieving your financial goals hassle-free.
Next, you will have to keep patient and maintain your investment portfolio without the worries of short-term fluctuation and timely diversify it for risk management. Trust me, over the years, it will help you generate the income that would not only help you build wealth but give you the financial freedom that you always longed for.
Ishu last edited by
@invest19 Very rightly said! But, investing in stocks may not be the best option for all. A lot of risk is involved in direct stock market investing. So, one needs to be cautious and act wisely. What about people who don't wish to take any risk and don't want to put their hands in the dynamic stock market?
Harleen last edited by Harleen
@invest19 Starting a disciplinary investing approach is essential to attain financial freedom. However, it's easier said than done. We tend to deviate from our financial goals every now and then for one reason or another.
I believe, in today's tech savvy world, automation of investments is a good way to invest regularly and build wealth. Even if we forget to put money, the automation feature (e.g. auto debits to SIP) will continue and keep accumulating our wealth.
stephbaker last edited by ftForumMod
I would say the investment is definitely one of the best processes to build wealth. You can start with peanuts and build an empire by the time you retire. Every month, quarter, or year, you can invest a particular amount of money in mutual funds through SIPs. You can fulfill all your financial goals by investing in mutual funds.
However, one needs to be highly disciplined and focused in making investment decisions. By investing in SIPs on a regular basis, the money keeps getting deducted from your account every month or quarter and in this way, you can accumulate and build wealth.
It is also important to have a short-term emergency fund in case of any unforeseen event in life. This will ensure that you do not pluck out your investments and let them grow.
Diversification is the key while investing money, hence it is recommended to have a life and health insurance and put some money in fixed deposits since there is a risk associated with investments in mutual funds and stock markets.
Tarun last edited by Tarun
Well written but not everything is easy as it seems. Let's talk about the dark sides that happened to lot of companies 2-3 years ago. There were attractions of corruptions, scams, misusing services, increasing debts, NPA affecting the stocks badly. Investing in stocks (directly) for long term is not as easy as compared to 10 years ago.
Mutual Funds sound acceptable to neutral risk taker, even debt mutual fund also have a chance of risk considering the dhfl downfalls. It's acceptable because fund managers kept changing the stocks for funds to exercise best performance. But it's acceptable only for those who don't have any idea about fundamental stocks at all (but still knowledge to acquire is your only solution to get better returns).
In spite of all these, I believe India is going to have a recovery economy since lots of plan are being reviewed these days plus lot of strictness in regulatory parts, so investing would be better option. But it's not a bad idea to diversify into gold, bank MOD (especially for monthly payout, which is impressive feature).
My point is that risk management is an art. No one should throw and run for long term, instead manage and review the portfolio time to time depending on economic / stocks predictions, giving strict self-stop loss to prevent from self-trap.
Jane last edited by
I would say start saving early, invest and don't stop!
Anmol last edited by
@invest19 Thanks for sharing these wealth building tips! Saving a small amount initially can lead to a habit of bigger saving and investment. But, one must observe monthly expenses and avoid or defer any unnecessary ones.
Rahul Patel last edited by ftForumMod
I believe that investing in the right securities is one of the most reliable wealth-building strategies. However, investment in stocks and other asset classes requires prior planning and a lot of patience. Here are some strategies that I feel can help investors maximize their returns:
i) Diversifying your portfolio with strategies like mixed mutual funds investments and PMS.
ii) Setting tangible and attainable investment objectives which state your specific requirements from this investment exercise.
iii) Preparing detailed investment plans that chalk out key aspects like your risk tolerance, investment objectives, expectations, investment amounts to be deposited etc.
A Former User last edited by
Nicely written. I will have to say the earlier the investment you made, the better the wealth that you will have in future.
And of course, it helps if you can diversify your portfolio with different strategies and different risk level.