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9 Golden Rules For Wealth Management To Generate Best Returns

IndianMoney.com Research Team | Posted On Wednesday, February 27,2019, 03:27 PM

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9 Golden Rules For Wealth Management To Generate Best Returns

 

 

Everybody aspires to be rich, and create wealth that is sufficient to lead a happy and stress free life. But many people lack financial discipline to achieve financial goals.

Financial planning is not difficult. Not doing financial planning puts you in financial difficulty.

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9 Golden Rules For Wealth Management To Generate Best Returns

You must understand that wealth accumulation is a long term plan. Below mentioned are the 9 golden rules for wealth management to generate best returns:

1) Know Your Real Worth

The first step is to create achievable financial goals. By knowing net worth, you will also know your assets and liabilities. This provides a snapshot of your financial abilities at a given point in time. Moreover, knowing your Net Worth helps understand the realities of your current monetary capabilities.

Frequently reviewing net worth facilitates determining what you must do to achieve financial goals. With this, you would be alarmed if you are not on track and can plan well, towards achieving personal financial goals.

SEE ALSO:  Rules For Wealth Management To Generate Best Returns

2) Spend Less Than Your Income

This is the most basic rule that everyone must follow to create wealth. Your spending must be at least 30% lower than your net income. Wealth creation needs surplus funds for an investment. It is foolish to spend all your income with no or minimal savings.

You must explore different investment opportunities in which you can invest your surplus funds rather than spend on unnecessary things. You must have a cautious approach when it comes to spending money. Keep track of your monthly expenses and review the same to cut down on unnecessary spends.

3) Invest Wisely With Proper Knowledge On The Product

You must have a sizeable sum of money to invest. If you have surplus funds in hand, there are a wide range of investment opportunities that you must consider to safeguard your hard earned money.

 You must ensure that you don’t invest in complex schemes that are tough to understand. Understand the product in depth and what it offers and then go for an investment. It is advisable to consult a financial planner if you are unable to figure out the right investment schemes.

4) Don’t Put All Your Eggs In One Basket

This is a very old saying. By putting all your eggs in one basket, you would run the risk of losing all the eggs if the basket falls. To avoid this, you must place eggs in different baskets. The same holds good when investing money. You must explore and invest in different investment schemes.

Diversifying your investment has the below mentioned advantages:

  • Minimizes the risk in your portfolio
  • Helps in preserving capital and protect savings
  • Eradicates the over dependency on a single source of income and helps in generating returns through other channels of investment.

5) Be Patient

You must note the points that investments are always subject to market risks. There would be fluctuations and you mustn’t panic. Trust your investments, have patience and give your investments time to settle and mature. Having patience would ensure you get better returns on your investment.

Consult a financial advisor when you come across market fluctuations. Financial advisors offer better plans for your investment. You must keep in mind that market volatility is an inseparable part of investment and must be tackled with patience.

6) Monitor Your Investments Periodically

Patience is critical in allowing your investments to offer best returns. However, mere patience does not help you generate better returns. You must track and monitor your investments periodically. Periodic assessments help you to find out investments that are performing and underperforming. You can then revamp investment strategies to get the best returns.

7) Be Safe, Be Insured

You are never sure of anything in this modern world of uncertainties. You never know what is in your way. Your job is not done by creating wealth; it is done when you insure it by availing insurance plans to cover risk. You must not mix investment with insurance.

Insure yourself and family members to avoid draining of your bank account in a medical emergency. This is why you need health insurance. In addition, avail life insurance policies like endowment and child insurance plans that help achieve financial goals. 

8) Plan Your Taxes

The wealth you accumulate would be taxed and this is unavoidable. You will be taxed as per the tax slab you fall under. The amount of tax you are liable to pay depends on your income. You must explore and invest strategically in those investment schemes that offer tax deductions and exemptions. Sections 80C, 80D and 80G cover certain investment, savings, insurance and donation schemes that offer tax deductions. It’s only wise to utilize these tax saving schemes.

9) Plan for Retirement

Retirement planning is a very critical part of wealth accumulation and management. You must invest in those schemes that help secure your life post retirement. Moreover, retirement planning schemes offer tax benefits. By having a safe and reliable retirement plan, you can lead a peaceful and stress free life.

SEE ALSO:  Plan for Retirement

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