6 reasons that stop you from being rich
We all dream to become a crorepati right? To own a luxury villa, drive the coolest car, provide the best opportunities to our children, enjoy a lavish retirement and to show off our financial status. Then what should you do to achieve this? The answer is simple: its “Wealth Creation,” and that is only possible when you start “Investing.” Of course, it’s natural to be hesitant about investments due to the potential of losing money. However, with wise planning, the results of investing are quite rewarding. Let’s look at some common mistakes that prevent you from being rich:
1. Delaying your investments
Waiting to find the right investment plan will kill your valuable investments years, and it’s impossible to compare/ succeed with a person who has been regularly investing; this is because the biggest pitfall of starting late is that you are missing out on the “Power of Compounding.” Remember what Warren Buffet said, “if you don’t find a way to make money while you sleep, you will work until you die.”
2. Being impatient
One must understand the basic rule of investing: if your goal is within 3-5 years (short term) then you must go for Debt Investments; any financial goal which is five years and above (long term) you must go for Equity. You cannot make money by investing in Equity for less than 5 years. Remember you need to stick to your investments to reap the benefits. Patience is key.
We are investors and not traders. Even if your investment plan is excellent, moving in and out of your investments will not earn you returns. Instead, you would end up paying more taxes, exit loads, and miss out on the spectacular returns that you would have made otherwise. Remember wealth creation is a journey. Hence, spend time in the market rather than timing the market.
4. Not taking chances
Benjamin Graham once said, “Successful investment is about managing risk, not avoiding it. ” You cannot generate great wealth with Debt schemes alone. You can’t play safe always. If you are young, it’s smart to invest in Equity Funds because you have enough time to forecast any fall in the market and benefit from long term returns. Remember, Equity Funds are known to be the best option for wealth creation over the long run.
5. Ignoring Inflation
Did you know your idle money would make you lose 4.5% every year due to inflation? The only way to beat inflation is to start investing, and it helps in maintaining “purchasing power.” If you want to make substantial returns over inflation, then Equity Mutual Funds should be your choice; they are safer than direct stock markets and earn 12-15% returns on your investments.
6. Not being smart with Taxes
Nobody wants to lose a substantial amount of their salaries to taxes. One easy way to reduce your tax liability is through investments. Investment option such as Equity Linked Savings Scheme (ELSS) not only lower your tax burden but also provide returns between 15-16% (which is way more than PPF at 8%) and has a lock-in period as low as three years only.
Now that you know about the importance of Investing! Why Delay? Start Now!
You are just minutes away to start your journey of wealth creation!