Wealth creation

The process of wealth creation consist of the following steps

1.      Identifying and maximizing investible surplus

2.      Investing available surplus in an efficient manner with periodic review.

I wrote about the first aspect in my previous posts (http://ap16j55.blogspot.in/search/label/Personal%20Finance)

Once the surplus is identified, next step will be to invest the same.

There are various instruments for investing one’s surplus based on risk appetite and time horizon. And the returns are a proportionate to the risk.

In India various instruments that are available are as follows. (similar products may be available elsewhere too). They are FDs, PPF various types of mutual funds etc.

FD can be used by people who want to protect their principle at all costs even at the cost of interest.

PPF has yearly limitation and lock in period.

Mutual funds have various hues, from which one can select as per one’s requirements.

All mutual fund companies provide a way to invest directly with them. It requires a one time registration with the fund house and subsequent transactions can be made online.

Thus the way to wealth depends on the above two steps. Of these second one can make or break total effort. Hence one needs to study carefully, all the options available and make an informed decision.