Don’t sabotage your chances of becoming rich

26 Nov, 2023 - 00:11 0 Views
Don’t sabotage your chances of becoming rich

The Sunday Mail

Not all people paid to get tickets for the World Cup Final. Some saved their money by getting passes for the match.

Wealthier individuals are inclined to save an extra dollar given to them compared to those with lower incomes. While some may argue that this is due to the limited personal income of the less affluent, an analysis of spending habits demonstrates that the wealthy are quite decisive about where and how they allocate their funds.

Take the example of how the rich managed to get passes to watch the World Cup 2023 final match while the poor made their way to the stadium by deciding to pay for the tickets. Many of them also paid prices too high for seats that would allow them a better view of the match.

Although it can be contended that elevated lifetime income correlates with increased savings, the reality is that the key factor lies in one’s attitude towards money. The way you handle finances is crucial. Many individuals spend their entire lives working for money without recognising the potential to make money work for them as well.

The simple practice of regular saving and investing can make this possible. It is not that individuals with lower incomes are incapable of saving; rather, they can set aside funds by prioritising essential expenditures.

Individuals in the lower and middle economic classes allocate a larger proportion of their income towards purchasing goods compared to the wealthy. This is apparent in their tendency to endorse brands promoted by their favourite celebrities.

It is uncommon to observe affluent individuals spending their wealth on frivolities that attract minimal genuine interest. The substantial disparity in income and savings levels can be ascribed to a deficiency in financial literacy or the incapacity to comprehend the intricacies of financial decision-making.

The notion of needing to attend prestigious financial schools or management institutions is outdated. Nowadays, individuals are increasingly acquiring financial knowledge from the internet. The web has transformed into an educational platform for those eager to learn and absorb information from its diverse pages filled with relevant content.

It is presumed that a family of four expended a minimum of US$2 400 to attend the match at the stadium. Instead of spending their money on an event easily viewable on television channels, that substantial sum could have been invested to generate future returns. However, is investing really that straightforward?

The process of investing a lump sum amount requires a significant amount of decision-making, and without proper consideration, the act of investing money may be considered futile.

Numerous investors frequently ponder the approach to strategically plan their lump sum investments in mutual funds.

If you are one of them, ask yourself the following questions before deciding how and where to put your money for optimal returns:

Have you conducted a goal-planning exercise to ascertain the appropriate equity allocation? If not, refrain from investing until you have undertaken this essential step.

Is this sum intended for a single goal or multiple goals? For each goal, what is the envisaged current asset allocation?

In the scenario where I allocate the entire sum to equity, how should I determine the new asset allocation? Is this revised asset allocation suitable for each specific requirement?

What percentage does this lump sum amount constitute in relation to your existing equity investments?

Do you prefer investing this lump sum amount all at once, or would you rather distribute it through smaller and regular monthly instalments?

What is the timeline for your goal? How extensive is your willingness to remain invested?

Are you considering supplementing the investment in the future with incremental contributions over the long term, or intermittently infusing funds during market downturns?

After determining the appropriate lump sum investment in equity for your future requirements, you can disperse the investment over several weeks to months based on your comfort and subsequently invest directly from your bank account into the equity fund.

The crucial aspect is to invest your money without hesitation. — Livemint.com

In the long term, market volatility renders the investment method inconsequential. What truly counts is your commitment to invest and the duration for which you decide to remain invested. — Livemint.com

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