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Wealth Creation – Meaning, Importance and Investment Plans

wealth-creation
wealth creation

What is wealth creation?

Wealth creation is the process of investing in different asset classes where the investments will help in fulfilling  key needs. These investments should also be self-contained that can generate a stable source of income, helping one to fulfil their aspirations.

The wealth creation process will be most effective if started early. Starting investments during the early stages of life will give a head start for achieving goals. It also helps in generating higher growth in the long term. This is due to the power of compounding. Power of compounding is a concept that will help in building a considerable corpus in the future. The concept of compounding revolves around reinvesting the returns back into the fund to earn  higher growth. Therefore, the longer one stays invested, the higher will be the gain in wealth.

Wealth creation process always starts with setting financial goals. Then these goals have to be classified based on the time period. For example, goals that an investor wants to achieve in the next few years will be short term goals. Similarly, there can be medium term goals and long term goals. Short term goals are the ones that one wants to achieve in the next 1-3 years. Medium term goals are the goals that one wants to achieve in the next 3-5 years. And any goal beyond five years is considered as long term goals.

Once the goals are defined based on the time period, one has to invest to achieving them. There are multiple investment opportunities available for potential investors. And mutual funds are one of them.

Mutual funds are a type of investment option that provides a platform for entering the financial markets with an investment as low as INR 500. There are various mutual funds available for the short term, medium term and long term goals. 

One can consider investing in debt funds for short to medium term goals. However, for long term goals, one can invest in an equity fund. An equity fund invests at least 65% of its assets in equity and equity related instruments. On the other hand, debt funds invest the majority of their assets in fixed income securities like government bonds, treasury bills and corporate bonds.

When investing for long term wealth creation, one can always choose the Systematic Investment Plan (SIP) route. SIP is a way of periodically investing small amounts in mutual funds. It is better than investing a lump sum amount. This is because investing regularly during different market cycles will reduce the average cost of investing and help boost returns through the power of compounding. One can calculate their SIP returns by using a SIP calculator.

Why is it important?

Wealth creation is a process of investing in multiple asset classes that eventually help in meeting one’s livelihood needs. Therefore, wealth creation as an investment strategy plays a significant role.

No one really knows what the future holds for them. Hence, it is better to start planning for the future from the beginning. Starting investments early will help in creating wealth in the long term. Short term investments will not always create wealth.

Each one of us will reach a point where we are unable to work any longer or earn an income. Planning for a safe and secure livelihood in the future is what wealth creation is all about.

Who doesn’t like to enjoy a relaxed retirement, in a beautiful beach house, or in a peaceful home in the countryside?  Who doesn’t want financial independence at this age? But how many of us can really afford it? What if there is a possibility to retire just the way we dreamt of? 

The solution to all these questions is investing early to create wealth.

Here are some reasons why wealth creation is important:

Regular income

Investments into good assets will help in generating alternate sources of income. For example, investments in equities, mutual funds or debt instruments will help in generating income through interest or dividends. Therefore, during retirement, these investments will be an additional source of income that will help one in retiring peacefully and have financial independence. Also, in times of emergencies or health crisis, these investments will help in addressing the contingencies.

Retirement planning

The benefits of investments are realized to a greater extent during post retirement years. Having a separate retirement fund will help investors in leading a stress free and healthy retirement. Retirement is the time where one’s savings or investments do the work for them. To create one such fund, it is important to start early and invest regularly. 

Goal based investing

Goal based investing is the best way to measure one’s financial success. All of us have goals and dreams about the future. Prioritizing and achieving one goal at a time will give the utmost satisfaction. To do so, one should list down all the goals along with timelines and start investing towards them. Starting small and early will help in wealth creation. Having a separate investment fund for each goal will help in achieving them sooner. Therefore, aligning investments to financial goals will help individuals to create wealth.

Wealth creation with Scripbox

Here’s a solution for all the aspiring investors. Scripbox helps its investors to create wealth through their customized plans. They have a plethora of investment plans that an investor can choose from. For example, build wealth, save smart, save tax (tax saving), principal protection and growth, be emergency-ready, and many more.

Additionally, Scripbox’s ‘achieve life goals’ plan helps investors to pick an existing goal and invest in them. For example, my first crore, retire confident, and child’s education planning.

Scripbox’s advantage

Investing in plans designed by Scripbox will help one achieve their financial goals easily. Scripbox helps in

  • Setting the right financial goal
  • Choose the best mutual funds
  • 100% paperless investing process
  • Comprehensive planning and Annual review of the investment portfolio
  • Investment management
  • Tracking the progress of the goal

Scripbox uses its proprietary algorithm to select the top performing mutual funds and design the investment plans and goals.

Additionally, investing through Scripbox will help one easily track the progress of their goal. Scripbox also does periodic reviews and suggests necessary changes for the investment portfolio.

Scripbox’s wealth creation plans

Scripbox has a predefined set of goals that act as a guide to wealth creation. Investors can choose from any of these goals to start their investment journey. For the purpose of long term wealth creation, Scripbox offers few plans, and some of them are given below.

Build wealth plan

The primary purpose of the build wealth plan is to create long term wealth. The savings plan has top equity mutual funds for long term goals that can generate inflation beating returns. The mutual funds are pre-selected by Scripbox’s proprietary algorithm. This plan can best be used for growing wealth, kids’ education and retirement.

My first crore

This plan guides investors to earn their first crore with small and regular monthly investments. Scripbox’s My First Crore plan will guide investors to the magic number. The savings plan allows investors to check how much they can make by investing a certain amount every month. It also shows a graphical representation of the journey of earning the first crore.

Retire confident

This Scripbox plan allows investors to invest towards a healthy retirement. The financial plan considers the investor’s age, current expenses and age of retirement before suggesting appropriate funds to invest. Retirement planning can be done in the early stages of life, as well. Investing in the early stages of life towards retirement can help create a huge corpus through the power of compounding. Also, starting early can give investors the benefit of investing in small amounts and help achieve the goal faster.

Principal protection

This aims to protect the principal amount and at the same time, maximize growth. This financial plan provides dual benefits of growth and principal safety. It can be used for lumpsum investment. Money invested in this plan is first diverted to liquid funds. And then a fixed portion of this is invested in index funds. Investors can use this as an alternative to FDs. This plan can give better returns than FDs and has better taxation than them. Investors can stop or withdraw their investment anytime.

Conclusion

Wealth creation is simple and easy when done right. Discipline and commitment to investing is the key to create wealth. Starting early in the career will help in multiplying returns by taking advantage of the power of compounding.  With various investment opportunities available in the market, it is essential to pick the right one that helps in wealth creation. Moreover, wealth creation aligned with life goals or financial goals, will help investors stay motivated. 

With Scripbox, one can invest in different plans to create wealth. Scripbox’s plans act as a guide to wealth creation. Therefore, investors seeking to create wealth in the long term can invest through Scripbox and enjoy their well designed investment solutions. However, it is important to note that mutual fund investments do not guarantee returns and are subject to market volatility. Hence, investors who understand and are willing to undertake the risk can invest in mutual funds through Scripbox.

Published on September 3, 2020