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One of the most famous phrases used by different investment experts is, “Make your money work for you." But no one tells you exactly how you can make that happen and grow your wealth. Investing in assets as opposed to liabilities is one of the most crucial yet misunderstood concepts in the world of investing.
Let's examine the fundamental ideas of assets and why investing more in them is necessary to increase your wealth.
In the truest sense, an asset is a resource with economic worth that an individual, organisation, or nation possesses or controls with the hope that it may provide a future benefit. As stated by Kiyosaki, “An asset is that which puts money in your pocket," which means that purchasing an asset grows your money. It is crucial to purchase assets rather than liabilities because assets increase your net worth and have a positive impact on your wealth-building.
Equities are ownership shares issued by publicly traded companies. They trade on stock exchanges like the NYSE and NASDAQ. You can earn from equities by either increasing share price or getting dividends.
An insurance plan can turn out to be an asset if planned wisely. One such insurance plan is the HDFC Life Guaranteed Income Insurance Plan. This plan offers guaranteed1 tax free2 benefits on maturity along with life cover during the income payout period.
Real estate and other physical assets are seen as an asset class that provides protection against inflation. Because of their tangible aspect, such assets are regarded as more "real" assets. Moreover, you can even invest in real estate properties with as low as INR 500 through REITs.
Commodities can be items, properties, or products that can be traded for a variety of purposes. Commodities include gold, silver, bronze, food crops, petroleum, and so on, and the market undercurrents differ for each. Unless it is gold or silver, merchandise is not intended for long-term investment.
Futures contracts, spot and forward foreign exchange, options, and a growing range of financial derivatives are all included in this category. Financial products that are based on or generated from an underlying asset are known as derivatives. Stock options, for example, are a type of derivative of stocks.
As an investment, buying assets is always a wise decision because of their increasing worth. Therefore, if you want to gradually expand your wealth, invest in assets and convert any liabilities you may have into assets that can generate passive income.
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HDFC Life Guaranteed Income Insurance Plan UIN: 101N146V02. A Non-Linked Non-Participating Individual Life Insurance Savings Plan. Life Insurance Coverage is available in this product. For more details on risk factors, associated terms and conditions and exclusions, please read sales brochure carefully before concluding a sale.