Warning: You’re Losing Money by Not Using Wealth Accumulation
The majority of our Time & Energy goes into acquiring money.
Everything you do all is for the purpose of acquiring money.
Your life has been surrendered in acquiring money. Essentially money becomes your Life, Value & Work.
The Key to successful wealth accumulation is clearly defined with realistic goals. Wealth accumulation is a systematic process and longer you invest more is the potential for it to grow.
There are different approaches to asset allocation.
- Defensive Asset Allocation
- Aggressive Asset Allocation
- Strategic Asset Allocation
- Tactical Asset Allocation
- Conventional & Contemporary
Asset allocation is part of the process. In this article, we are not going to discuss asset allocation.
Pursuing financial independence is an ongoing process. Wealth Accumulation should not be mixed up with the process of achieving financial independence. The difference between Financial Independence and Wealth Accumulation is similar to the difference between need and want.
Wealth as a concept will vary from person to person. For the purpose of Wealth might vary from person to person and reasonable asset goal will also vary from person to person. It could be anything ranging from college fees, marriage, home, security, retirement, etc.
The two main points that are the most crucial for
Financial prudence comes with discipline.
Rich people also become a pauper because of a lack of financial discipline.
The right financial strategy with apt Risk management is the Key to Success in Financial Management.
Having a strategy in place and managing the same with disciple is very important.
You might have the best of the above combination but not following in a disciplined manner could lead domino effect on your financials.
Debt is one of the most common reasons for a domino effect on your personal finances.
Now from the above chart one can see the effect of the very small amount but done over a period of time can have a very large impact.
The total amount invested during this period is Rs. 7.2 Lakhs.
But the amount realized in 35 years is Rs. 3 Crores.
This is the Impact of Discipline.
#2. Long Term
The concept of Long Term is very simple, yet amazingly powerful.
Most people who start saving expect to earn quick money. They become very restless with results. Because they are not able to ignore seeing how the account is performing. This entire process is more psychological financial behavior than anything else.
Saving is very important. Even more important is how you save and where you save.
If you are a very defensive or conservative investor because of your nature you might end up saving in low yield returns. This over a period of time would be unmotivated since the results would not live up to your expectations. At the same time if you are completely opposite aggressive and high-risk taking investor you might be happy in short-term with high rewards perhaps it is rare for it to be consistent.
Saving is important so is the Process.
This phenomenon is very similar to those who go to the gym for the first time. They are highly motivated and they want to take out their last drop of sweat and they expect their bodies to transform within days. This is not possible and after a few days they do not see any transformation and finally, they give up the process itself.
The same happens with saving and investments. Initially, when people start savings they would like to save the maximum amount possible. This makes them look at their account all the time expecting huge returns. Now that they are unable to see returns they get unmotivated and stop the entire process itself.
Ideally, people should start with a very small amount which is ignoble to their account and this amount should not bother them at all. This should be a minuscule amount and gradually invest more.
Very gradually investing and saving a little more over a very long period of time would give wonderful results. Any asset class is Real estate, Gold, Bonds, Mutual Funds, etc. They all perform excellently in the long-term.
Over to You
Let us know if you have a different Idea on Wealth Accumulation.
Also, tell us your experience in Wealth Accumulation and the Challenges you have faced.
Come back here and tell us about the before-and-after. I bet you’ll have something to say!
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