Most people dream of becoming successful in their lives. This directly translates into becoming rich and being someone popular & respected in their social circles. Many of us who are born and blessed with a financially sound family are looking to expand our horizons further by generating more wealth than our parents.
Many of us who did not have it all are also looking for ways to earn higher and break out of the shackles of money problems. The common thing that both these groups are trying to create is “Wealth”.
“Wealth” is defined as having a surplus of valuable material assets or resources, and for many, this equates to having a substantial amount of money and freedom to make your own decisions.
From a financial perspective, our wealth can be described as the combined value of our savings and investments, subtracting any outstanding liabilities such as loans.
Savings and investments don’t grow automatically, they require a well-thought-out wealth creation plan to help us reach our financial goals and lead a secure life. So, what exactly does wealth creation entail, and why is it significant? Let’s delve into these questions for a better understanding.
What Does Wealth Creation Entail?
Building wealth means more than just relying on our regular earnings. While our income from employment or business may increase with age, so do our responsibilities and expenses. As a result, it is important to establish alternative income streams to accumulate wealth.
One effective method to achieve this is by investing your savings strategically to generate returns. 2 decades back, information wasn’t as freely available and one had to work hard and find means to grow their wealth. Investing in a mutual fund wasn’t as easy as it is today, thanks to the arrival of the internet which has enabled digitised the entire banking sector. If you are 25 and looking to start your investment journey this is how much you can create by age 60 just by investing in mutual funds.
Investment Duration | Expected Annual Returns | Monthly SIP Amount | Investment Value at 60 |
35 years or 420 months | 16.86% | ₹5000 | ₹2,33,61,814 |
This means by saving just ₹5000 and investing in an asset that provides about 15-16% return for 35 years, you can amass an investment value of more than ₹2 crore rupees.
Float’s SmartStart Wealth is a mutual fund basket that has provided a similar return over ten years. Smart Start is a good place to start their investment journey with mutual funds.
This scheme consists of stable and consistent performing schemes. Let us look at the schemes this mutual fund comprises of:
HDFC Balanced Advantage Fund – Regular Plan-Growth
This fund offers a balanced approach, combining equity and debt investments to provide stability and growth potential. 25% of your investments are allocated here. This scheme has earned a return of 13.17% over 10 years.
ICICI Prudential Small Cap Fund – Growth
Small-cap stocks have the potential for high growth. 25% of your investments are allocated to this fund and it has earned a return of 18.75% over the past 10 years.
SBI Equity Savings Fund – Regular – Growth
This fund offers a unique blend of equity, arbitrage, and debt investments, providing stability and potential for higher returns. It constitutes 25% of your portfolio, adding diversification and risk management and has earned a return of 8.85% since its inception in 2015.
Nippon India Large Cap Fund Growth
Large-cap stocks provide stability and steady growth. It comprises the remaining 25% of the portfolio and has returned 16.98% returns over 10 years.
Features of Floatr’s SmartStart Wealth Basket
The basket comprises a selection of stable and consistently performing mutual fund schemes, making it an attractive choice for both novice and experienced investors.
Let’s delve into the distinctive features of SmartStart Wealth:
Preferred Tenure – 10 Years: SmartStart Wealth encourages a long-term investment horizon of 10 years. This extended tenure is well-suited for those who seek to harness the potential of compounding and wish to attain substantial financial goals over time.
Risk Category – Aggressive: This portfolio falls into the aggressive risk category, signifying a higher potential for returns. While this comes with increased risk, it also offers the opportunity for greater rewards, making it suitable for investors with a higher risk tolerance.
Minimum One-Time Investment – INR 5,000: To initiate your investment in Smart Start Wealth, a minimum one-time investment of INR 5,000 is required.
Minimum SIP (Systematic Investment Plan) – INR 2,000: For added flexibility, Smart Start Wealth permits investors to make regular contributions through SIPs, with a minimum monthly commitment of INR 2,000. SIPs enable gradual, disciplined investing, making it convenient for individuals to build a substantial corpus over time.
No Lock-In Period: Investors can access their funds as needed without penalties or restrictions, providing liquidity and freedom to adapt to changing financial circumstances.
The Significance of Wealth Creation
The importance of wealth creation in our lives cannot be overstated for the following reasons:
Achievement of financial goals
Wealth creation helps you realise your financial aspirations, helping you reach your desired milestones and objectives.
Additional income source
It is an additional income source, supplementing your earnings throughout your working years and increasing your financial stability.
Post-retirement financial security
A well-structured wealth creation plan ensures a consistent income stream during retirement, ensuring financial security for you and your loved ones.
Financial independence in retirement
With wealth creation, you can embrace a financially independent lifestyle during your retirement, enabling you to savour the activities and pursuits you cherish the most.
Conclusion
Building wealth plays an important role in a financially stable and contented life. It empowers you to lead with confidence and actively chase your aspirations. If you have a good understanding of wealth management and creation, it is time to leverage this knowledge to your benefit. Start your journey towards your financial objectives with Floatr today.
