Wealth creation strategies

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Text of Wealth creation strategies

Financial Education

Strategies for Wealth Creation & Management

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1

The basics first

Assets

Liabilities

Make a list of the following

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2

The Basics again

What are Assets / Liabilities for Personal Wealth Creation?

One that gives a POSITIVE CASH FLOW IS AN ASSET

Others are Liabilities / Expenses.

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3

What is growth / return?

Time Value for Money

Relative Growth

Nominal Interest Rate Vs Effective Interest Rate

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4

What is Risk?

Actual Returns Vs Expected returns

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5

What is Wealth?

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6

Take 2 minutes. Close your eyes and imagine a wealthy person. Write what you see.

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7

A person's wealth is defined by how long a period of time he/she can sustain their lifestyle if they stop working.

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8

The longer you can go on living your life without working another day, the richer you actually are.

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9

Your wealth is therefore defined by three things

Your monthly expenses,

Your liquid assets and

Your passive income.

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10

The Mantra

TIMEStart earlyUse the power of compounding

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11

Where do I Invest?

EQUITYCurrent Yield LowCapital Appreciation HighTypical Returns - 19.25% as per SENSEX returns since 1979Risk HighMarketability / Liquidity HighTax Treatment - No long term capital gains tax after 365 days. Dividends received are tax freeConvenience - High

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12

Where do I Invest?

BANK DEPOSITSCurrent Yield ModerateCapital Appreciation NilTypical Returns - 8% Average Risk NegligibleMarketability / Liquidity HighTax Treatment - Section 80C benefits for 5 year deposit. All interests are taxable Convenience - Very High

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Where do I Invest?

MUTUAL FUND - EQUITYCurrent Yield LowCapital Appreciation HighTypical Returns - 39% Average over 3yrs Highest return - 69%Risk HighMarketability / Liquidity HighTax Treatment - Section 80C benefits for Equity Linked Savings Schemes. No long term capital gains tax after 365 days. No tax on dividends received.Convenience - Very High

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If spending money brings you enjoyment, you will never be rich.

However if making money brings you enjoyment, then your wealth isguaranteed.

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15

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