Wealth building is an exercise one should practice as soon as one starts working.
Here are a few things to keep in mind to help you pave the way ahead:
- Asset-liability and wealth building: It is important to understand the difference between assets and liabilities and not get confused between the two. Assets generate net income and liabilities mean expenditure. Assets include:
- Cash reserve in saving account.
- Retirement and Pension Plans
- ULIPs and investment Plans.
- Life Insurance.
- Zero debt rental property etc.
Our goal should be to accumulate as much of the above assets as possible.
- Return on Investment:ROI is the key if you are looking at building assets. We consider a lot of things as asset. But the true definition of an asset is something which is generating income. Look at building more income-generating assets in your working years to live a comfortable life in your golden years.
- How to begin building wealth: Accumulate assets and start reducing your liabilities. Majority of people get tempted to buy a liability over an asset and this creates financial issues later on in life. Income from assets and income from job can contribute to your increase in savings. Income from assets must increase to support income from job.
In simple words, to become wealthy, one must have more than one source of income. Choose the right assets to invest in and start building wealth.
HDFC Life Click 2 Wealth is a Unit Linked, Non-Participating, Life Insurance plan that offers market linked returns, charges minimally, provides valuable financial protection for you and your family.
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"The thumb rule for retirement planning is - the earlier you start, the more you save. However, with age, your priorities change too. So, you need to factor in the cost of living in the present vis- a -vis future."
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