How to create wealth to achieve your dreams

The key to creating wealth lies not in investing large sums of money but in picking the right instruments to drive growth towards your goals.

Martin Luther King gave the world his legendary ‘I have a dream’ speech. Four simple words that started a litany on life and ambition for dreamers around the world, the speech encapsulates human life itself. Every human being has the dream to achieve happiness, wealth and fame in life. But only a few have the necessary drive to achieve these goals.

This latter class of people believes in making things happen through effort and ingenuity, instead of waiting for circumstances and destiny to work for them. Hence, they are more geared towards realising their ambitions for themselves and their loved ones. They realise that proper savings, the right investments and a slightly elevated appetite for risk are key to creating prosperity for the future.

Those looking for fail-safe wealth creation avenues would do well to consider making the right investments. Every person is an investor, whether he parks his money in such instruments as bank Fixed Deposits or takes his chances at the stock markets. The investment vehicle one chooses depends on future life goals, which can range from paying for a child’s foreign education to building a retirement nest.

In today’s times of high inflation and rising living costs, only aggressive investment options such as putting money in real estate, gold or equity can fetch high returns for wealth creation. Of these, financial advisors would demarcate mutual funds as good investment destinations, since they can speed up the realisation of one’s personal wealth goals. They offer lower risk and low cost of operations as compared to other investments such as real estate, and they are operationalised by expert guidance from professional fund managers that charge an affordable fee for their services every year.

To make a sizeable corpus for the future, you require focus, patience and the appetite to see your investment through over the long term. It is possible to gain returns as much as 20% of the investment every year if one chooses a portfolio comprising equity or small cap schemes, or even midcap ones. It is pertinent to measure one’s investment component in the returns: the returns will comprise the invested sum of money plus the gain on the investment over a certain period of time. At the moment, an average rate of return on the Sensex is pegged at about 17%, so the calculation of projected returns can be done accordingly.

Often, investors feel that they will make a lot of money for the future merely by having a mutual fund portfolio. However, the key is in choosing the right wealth creation instruments. It is possible to make a large amount of money through mutual funds if you take the power of compounding into account. The returns must be pegged at a rate that beats future inflation and gives at least five times the amount invested.

However, investing in mutual funds over a long period of time and in a systematic manner is often the most important element in wealth creation.