Top 5 Easy Wealth Creation Methods That You Should Be Following
Wealth creation, or simply growing one’s net worth, is one of the major necessities for human beings today. Right from choosing our career path and landing a job, most people learn about the importance of wealth in life.
In financial terms, wealth creation can be referred to as boosting assets and reducing debts over time. It eventually establishes a reliable source of sustenance so that you would not have to strive to make ends meet. The wealth creation journey might be challenging since it takes a lot of hard work and, of course, time - one of your most precious resources. However, many people aren’t aware that knowledge and strategy can speed up this process.
That’s why we are here with some of the best and easy wealth creation methods that you should start following.
Top 5 easy wealth creation methods
1. Set your financial goals early
No one would like to race all their life without aiming for a specific goal. Whether it is your retirement plan, estate plan, savings plan, or even an emergency fund, setting the right goal is the primary step towards building substantial wealth. Here, time vs. income is a relationship where time acts as a limited resource to generate more revenue and savings. Along with that, you need to set your goals and start saving a portion of your income early in your lives so that savings have a longer runway to grow.
2. Make use of asset allocation.
Like having numerous income sources sounds lucrative, having many investments is also one of the promising wealth creation methods you can follow. Since the market is highly volatile, you can’t just rely on one asset to generate the desired revenue. Here asset allocation helps you reduce risk and maximize returns by diversifying the investments into different asset classes such as gold, equity, real estate, and fixed income products depending upon the market cycles.
3. Invest in equity
Equity allocation is one of the best methods to accomplish timely wealth creation. Many financial experts say that equity as an asset class has given the best inflation-adjusted returns over a long time. Thus, it would be a wise decision to capitalize a portion of your savings into the equity market. However, always keep in mind to take a planned risk with equity investments. One effective way is to allocate 50:50 to debt and equity holdings. In this way, you can readjust your portfolio after some time, depending on equity market performance.
4. Maintain a good credit score
Many young earning individuals these days end up taking up more and more loans when their incomes start rising. Here debt, if not managed well, acts like quicksand that can ruin your dreams. Some of the easiest ways to maintain a good credit score are paying bills on time, keeping your credit card balance low, and limiting new credit card applications.
In addition, you can follow the 20/10 rule of finance. This rule simply means that total household debt (not including house payments) shouldn’t exceed 20% of your net household income. Also, monthly payments/installments shouldn’t exceed 10% of the NET amount you bring home.
5. Have alternative income streams
Other than your primary source of income, you always have the option of generating alternate income through alternative jobs, investing in income-generating stocks or bonds, etc. Real estate is another easy form of generating passive income that can yield great returns even in inflationary situations. For example, if you have leased property, you can generate higher rents when the prices go up.
Successful wealth creation takes time, effort, and the right methods. Like the above-discussed points, many crucial tips and tricks can accelerate the process. All you need is expert guidance through a wealth management course. At OAWA, we provide the best wealth management course in India, where you learn to earn, grow, and manage your finances. Enroll with us today!