Invest to create wealth

Wealth creation is putting money aside or investing today to get more tomorrow. When we mean more we mean more than our cost of living at that point of time. We usually put aside this money over a period of time, just like SIP but it is not Systematic, but periodic. I would say 90% of us invest in Fixed Deposits as we know they are safe, but inflation eats into the corpus over a period of time. Wealth creation is also possible through Real Estate investment, but this requires a large chunk of money. Also this investment is not very liquid and there is long term capital gains tax. Gold is another investment which most of us do. Then there is the equity market. These also give good returns as good or better than real estate, depending on the period invested. The best part is liquidity and no long term capital gains tax.

Now when we talk of equity, there are 2 ways, trading and investing. For regular trading you need to have market knowledge and research on a regular basis. In addition to that you have keep watching the stock movement, to make profit or reduce loss. In trading concentration is usually only on price movement of the stock. The other option is investing, here it is always long term. Here you invest after some research only. Once you have done your research, let equity work to create wealth. Never sell the equity, just because the market is down and the equity price is fallen because of that. If your research is through, the equity price will come up. As I said earlier, let the equity work for you. Some tips on research. Check the last 5 years results, they should have always been positive and have been growing. If you don’t have the time or temperament to do the research, invest in mutual funds and let them do the work for you. The price paid in not much.

Remember there is only one way to create wealth, buy smart. Whether it is real estate or equity, you have to research on the growth potential and stay invested over a long period of time. Always review the results of the company every year to see that there are profits and there is growth, if not why. In case of real estate, check if the growth is better than inflation. Companies always give yearly guidance, read it. So invest right and create wealth.