Most people are professionally well settled when they reach their 40s. However, not all of the professionally successful people are good at handling their finances or investments. To be successful in life, it is not just enough if you excel in your career and earn more, you should be also good at handling your finances and investments to make the best out of what you earn. Here are some tips that will help you grow your wealth.
- First, you should focus on your career as the highest income comes between the 40s and 50s for any professional. People are bound to get good promotions and excellent income around the age of 45. This is when you have to start thinking, planning and working on saving/ investing the major portion of your earnings for yourself and your future. So, focus on your career and earning more.
- Second, you should start increasing your saving/ investment rate each year. You should be able to increase your savings to at least 20-30% of your overall income by the time you reach your 40s. Make sure to have a well-balanced saving/ investment portfolio that will not only give you good returns but will also be available (liquidity) when you need them for an emergency.
- Third, talking about emergency needs, once you hit 40, you should also start saving for emergency expenses apart from your regular savings. Medical emergencies can arise at any time without any warning. Other emergencies around the house like a broken pipe, leaking tap, car repairs and so many other stuff which might sometimes require a reasonably bulk amount might also occur. You should be prepared to bare those expenses without touching your regular savings.
- Fourth, this is the time to invest for growing wealth and not for receiving a regular income. You should not be opting for very safe, conservative and low-risk investment options to grow your wealth. Now is the time to take some risks (if you have not done already) and start investing in equity rather than save in fixed deposits, insurance and PPF. These are mostly income-oriented investments. Stay away from equities with dividend option or government bonds/ savings schemes or averagely designed insurance plans. A well-researched equity portfolio is sure to grow your wealth exponentially.
- Fifth, take a bigger step. It is not enough if you just have a good equity portfolio, you must also be investing more in them. You have to invest large amounts to in mutual funds to accumulate wealth. However, always do your research or contact a good agent before choosing a mutual investment.
- Sixth, if you have not already bought a house, you should do it at least now. Take a home loan which will also allow you to save tax and buy that dream house of yours soon because it is not advisable to take a new loan or invest in real estate when you near your 50s.
- Seventh, try to venture into new start-up business that interests you apart from keeping your regular job. Though this might not give you immediate returns, it will help you to fulfil your dreams of doing what you like. If the business picks up, then by the time you near your mid-50s, this might become your primary source of income!
The 40-50 period of life is a wonderful time when people have the energy and passion for big change and new challenges. So, make maximum use of your potential and the time to earn well as well as invest wisely to grow your wealth quickly. Be aggressive with your savings and investment and leave no room for any kind of compromise. If you find any difficulty with your financial planning, approach experts who can help you in building wealth for your future.