Building wealth implies the process of accumulating financial resources and assets over time with the aim of increasing net worth. As per Kavan Choksi, making smart, well-informed financial decisions, as well as creating and implementing effective strategies, are vital to wealth creation. Being a successful investor, business management consultant and wealth advisor, Kavan has a good understanding of how to create wealth for the long term.
Kavan Choksi briefly discusses a few ways one can steadily build their wealth
Wealth building goes way being just earning a high income. It also involves effective management and allocation of resources in a manner that promotions long-term financial growth and stability. Wealth creation happens over multiple years, even decades. It is a steady, slow and measured approach that can help people to raise their net worth over time. Here are a few ways people can gradually build their wealth:
- Save as much as possible: One must be proactive about saving money. There are many who, unfortunately, spend a good part of their earnings on fancy dinners, branded clothes and more rather than investing in assets. But such an approach would only hamper one’s finances in the long run. Rather people should allocate a certain amount of their monthly income for savings or investment purposes.
- Think for the long term: Everyone wants to get rich quickly. However, in the process of doing so, they often fall into a cycle of making bad decisions. It is quite easy to fall for schemes that promise overnight success today as they are advertised cunningly. But it is important to remember that wealth creation is more of a marathon and not a sprint. One is likely to be much better off investing in mutual funds or the stock market for 5+ years instead of putting their hard-earned money in risky schemes. One does not have to dwell upon short-term market fluctuations or trends as they invest for the long term.
- Diversify: Diversification is among the most vital tools for wealth generation. It allows for lower risk and volatility, provides better protection against market phases, and improves opportunities. Having a myopic worldview can prevent investors from making the best possible use of their investment opportunities. It is a good idea for investors to diversify their portfolio beyond traditional investments and explore options like gold, mutual funds, ETFs and so on.
- Build the perfect portfolio: Simply conserving money is not enough for wealth creation. After all, as a person works for money, their money must also work for them. Rather than having money lying idle in the savings account, people should let compounding interest work. The best possible results can be achieved by investing in a balanced combination of mutual funds, stocks, alternative assets, and others. In the opinion of Kavan Choksi, whenever investing, people must try to weigh the risk-reward balance involved and make their decision accordingly.
Rather than getting fooled by the schemes that promise easy wealth but hide giant risks, investors need to spend time learning how to build wealth. Doing so would involve crafting an investing plan and adopting a long-term mindset.