Importance of Wealth

Every one loves to create Wealth by living life to the fullest but sometimes we have to sacrifice our basic needs and we normally do not like it. Usually, most of the people belonging to the middle income group suffer in the process of creating the wealth. Either they are burdened with loads of debt or have lot of expense; in either of the two cases their entire income goes in repaying the debt or meeting the expenses respectively.

With us growing in our life our responsibilities increase and with respect to this our expenses increase exponentially in every necessary phase of our life and some of the responsible factors for this can be: marriage, child, child education, child marriage.

“Why a common man does not live a life Financially Free”, this thought used to roam around in my mind earlier. I tried exploring the reason and came out with some trends of living life. Let us understand this thing by taking a hypothetical example – suppose a bachelor guy is earning Rs. 50,000 per month and he is living very comfortably. This amount was well enough for him. Then after 2 years his income becomes Rs. 70,000 and he gets married. Now, 2 person have to fit in their expenses in this amount only (considering the female partner is not working). So, the maximum budget assigned to each of them is Rs. 35,000. Now after 2 years his income becomes Rs. 90,000 and he gets one beautiful child in his life. Now on each person the budget gets assigned as Rs. 30,000. As the child grows up the expenses will further increase and there are numerous other factors that determine the fluctuation in the expenses. In this context, you can read my previous article on how to achieve financial freedom.

Now, you can clearly understand that how much difficult it becomes for a salaried person to sustain in this world. As our expenses increase in much faster rate as compared to our salary. We should also consider one very important factor in this i.e., Inflation. By inflation our purchasing power decreases and in India its normally around 10%.

Suppose, a person who is earning X amount per month which is pretty sufficient for him and he invests Rs. 10,000 regularly in Share Market or Mutual Fund to earn something more and to save some extra money. And he continued this for say 5 years and assume he earned 18% compound return, so your invested amount Rs.600,000  will become Rs. 976,579. So, you can clearly understand how investing as a Value Investor can make you worthy. The return completely depends on your monthly investment, rate of return and time period for which you invest.

You must also understand that Stock market is volatile, in bullish market it grow at a very fast pace and in the same way it falls in the bear market. Sometimes, in an year it can go up or down by 30-40%. But in the long term, market always gives good return to the investors but one needs to select the shares or mutual funds carefully and on the regular interval he or she must evaluate its performance.

Every one can enjoy the good return he just needs to stick with his decision with patience. If you like to build wealth; you have to start your 2nd source of income. Hope you will start it in this year.

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happy Investing!!