Wealth creation is not an accidental event. Luck alone cannot make you rich. It requires careful planning and a lot of discipline. To build wealth, you must follow the time-tested rules and to stay wealthy you must follow the same rules. Here are ten commandments that can help you build wealth and, of course, stay wealthy.

1. start early: Compound interest is like a little snowball rolling down a hill. The longer it rolls, the bigger it gets. At the age of 20, if you start investing 10,000/- monthly at 15% p.a., you will retire at the age of 60 with a corpus of Rs 31.40 crores. If you delay and start at 40, you will retire at 60 with only Rs 1.52 crore! You can argue that if you start at age 20, you will have invested more and hence the corpus is higher. Even if you decide to invest twice (Rs 20,000/-) every month at the age of 40 to 60 years, the total amount invested by you remains the same (Rs 48 lakhs), but the retirement fund is just Rs 3.03 crores Will happen.
2. live within your means: The habit of spending more than earning affects people at all income levels. Loans should be used sparingly for assets that appreciate or allow you to make more money. For example, a home loan or education loan makes sense. There is no point in using the loan for consumables or things that have declined in value. Impulse or emotional purchases are dishes for financial disaster. Before making any major purchase, you should consider whether it is a “need” or a “want”. If it’s a “want,” you must make a conscious decision about whether or not you can afford it. Many people these days use credit cards as “a tool to buy essentials at a cost they can’t afford they don’t have the money to.” Set a goal to be debt free.
3. Get Professional Advice: Do you go to the dentist for legal advice or a plumber for heart surgery? So why not seek professional advice for your investments. Often brokers show you the track record of mutual funds. First, check their track record! Don’t get stuck with one seller.
4. Don’t guess: Do not speculate as money is slippery and difficult to keep. Don’t bet your hard earned money on stocks you know nothing about. Even with all due diligence, you will end up with some bad investments. The trick is to avoid significant losses.
5. Follow a good financial plan: Most investors don’t have a plan. His investments represent a collage of ideas sold to him by various salesmen during his lifetime. There is no room for gut feelings. Summarize your goals and plan your investments to meet them.
6. Be patient: We live in a world where two things have been forgotten; Common sense and patience! Marathon runners are not necessarily the strongest and fastest. They have the patience to wait for the right moment to create that final burst of speed. Along with investing. Only a patient investor creates long term wealth!
7. Don’t worry: Don’t be too greedy: Bull market brushes negative news under the carpet just as positive news is greeted with skepticism in a bear market. Stock markets cannot go up or down forever. Greed and fear are two emotions that must be kept under control to be a successful investor.
8. Create a Contingency Fund: The world has become a very challenging place. You are never warned of imminent setbacks such as a medical condition, a downturn in business, or a job loss. Build an emergency fund to cover your living expenses for at least six months.
9. Have enough insurance: Medical expenses ruin many retirees. The bottom line is that you need to take action to reduce your risks. It would be best if you were concerned with insuring four areas: your property, life, health and finances.
10. Plan your estate: Your first step in estate planning is writing a comprehensive will that runs smoothly through the probate process. Nominations must be registered in all your properties. Get professional advice.

Ideas are personal: The author is Shibu Das, Founder of Fine Advice Pvt.


Disclaimer: The views expressed are those of the author and are personal. TAML may or may not subscribe to it. The views expressed in this article/video are in no way intended to predict or time the markets. The views expressed are for informational purposes only and do not imply any investment, legal or taxation advice. Any action taken by you based on the information contained herein is your sole responsibility and Tata Asset Management will not be liable in any way for the consequences of such action by you.


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