In the todays world of hubris and hamartia, where uncertainty soar high, achieving long-term wealth might seem like a distant dream. Yet, for young professionals with the drive for personal development and financial success, it’s entirely possible. You have the incredible opportunity to not only build a successful career but also pave the way towards long-term wealth creation.
In this article, we’ll embark on a journey towards financial freedom by following a comprehensive step-by-step guide that is grounded in both wisdom, facts and careful planning.
1. Manage Your Personal Finance with the 50:30:20 Rule
Financial discipline is your first step toward wealth creation. The 50:30:20 rule is your trusted compass. Allocate 50% of your monthly income to essentials, 30% for discretionary spending, and save a minimum of 20%. This 20% is the cornerstone of your wealth-building journey.
Wealth = (Income — Expenses) x Return on Investment^ Number of years you are invested.
Hence unless you increase your income and keep a check on your expenses your investment journey won’t go any further.
“The goal of a successful investment is to create long-term wealth, not short-term riches.” — Warren Buffett
2. Create a Safety Net
Life is unpredictable, and financial security is non-negotiable. Before you invest in growth assets, invest in term insurance and health insurance. Catering to medical emergency can quickly empty your wealth and put in debt.
Always do your own research and seek for simple term insurance policy instead of ULIP or multi benefit- schemes which guarantees some return, however these schemes are always expensive and neither they give high return nor the sum assured is high enough.
Term Insurance Sum insured should be 20 times your basic annual needs.
“You don’t buy insurance because you are going to die, it’s because those you love are going to live”.
As we are all living in a high uncertainty period, maintaining a liquid fund equal to at least 6 to 12 months’ worth of…