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Updated by snehathakur368 on Apr 12, 2017
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The Ten Commandments of Wealth Building

There are going to be many places you can invest your money but unless you get this right (from day 1), it is going to be a challenge. Now, in case you do not have a professional guiding you on your investment ideas, here are some of the most important rules of investing! The ten commandments of wealth making we would like to call it –

Source: http://karvywealth.com

1

Spread your investments throughout your career:

Spread your investments throughout your career:

You do not have to start big, the idea is that you start as early as you can and never stop pushing yourself more towards making the next investment. You have to keep in mind that the aggregate will spread out to a larger number over the years and during your earning years, you would spend, save and also invest which would make your retirement years completely independent.

2

Decide on a percentage you would save

Decide on a percentage you would save

It always works when you decide on the amount you would be saving and then decide on the amount you would have to save. Many of us think it the other way; we spend and then decide how much we can save. Always cut the 15% or 20% you have earmarked to save each month and keep it away. That would help in two ways. One is that there is reduced pressure at the end of the year when you to make a larger investment – say you have to put Rs 60,000/- into an investment each year, make it Rs 5000/- each month and suddenly, it does not seem like a large amount. Secondly, when you deduct your savings off at the start, you automatically spend lesser.

3

3. Need V/S want

3. Need V/S want

We keep thinking about the things we need to buy, and more often than not we think about the things we want to buy! They are completely different requirements and you have to distinguish them right at the start. This simple technique would help you keep aside more money for a rainy day and help you tremendously.

4

Extra money is still money

Extra money is still money

We tend to splurge the moment we get money that was unexpected. Not that it is a wrong thing, but imagine if that money was kept to good use? Let us say you were to get your annual bonus or a policy that matured, you would be better off putting that money in a place that gives you a better return on a one or two year horizon. These kinds of investments would give you a better return as well as be a good saving for the future.

5

Read up before any investment

Read up before any investment

There are going to be many places for you to invest your money, the idea would be to understand how this money is intended to grow and at what percentage. This is definitely not an easy task but it would give you amazing insight into the way the industry works and the benefits that come with it. It would be a guide in many ways to understand how your growth market should be and why you must invest in certain ways.

6

6. How much can you risk?

6. How much can you risk?

This is the toughest question for most people to answer to be honest. There are way too many sources to invest in and unless you have got this absolutely spot-on, you would have way too much to invest in and eventually invest more than your appetite. One of the biggest risks we face is to over invest and then struggle to pay up or pull out of the investment. The easiest idea is typically to invest as per your appetite and then figure out how much you can get out of it.

7

Keep the right target and exit at that

Keep the right target and exit at that

Many of us follow the idea of investing and just waiting for the returns to go all the way up and down. Whenever you invest, think about the amount that you have put in and what percentage are you aiming at it rising to. Once this is in place, you have to mark an alert to exit and book your profits. That would honestly be the best way to average out your profits.

8

Invest in industries

Invest in industries

The key to this point is to understand why you must invest in an industry rather than a company. The idea is to spot the industry that would grow rather than a single company. The moment you have this in place, it makes it easier to stretch your list to a few companies to invest in.

9

Track and record your growth

Track and record your growth

Hire the best wealth management services to track and understand the right growth that is happening for the shares you have invested. It takes a fair bit of research so it makes sense to have an expert do it.

10

Never stop averaging

Never stop averaging

Many of us tend to pull out of a share the moment there is a dip in the market, in reality though, a dip in the market is the best time to further invest in the market and get your average investment price right.