Simply by math, if you invest Rs 36,733/month for five years at an assumed 12% rate of return, you will easily reach your goal through the SIP mode. But it is easier said than done.
Other qualitative metrics need to be considered before investing in the above calculated monthly amount.
Here are factors that can help you make your wealth creation journey easier:
Consider Your Investment Constraints
Before investing a pre-specified amount each month to reach your desired level of wealth, you should consider your objectives in terms of risks and returns, time horizon, liquidity or tax constraints, and other unique considerations that might affect you if a severe event occurs during your investment horizon.
Differentiate Between Your Ability and Willingness To Take Risks
The ability to take risks is more a function of your underlying financial condition, whereas the willingness to take risks is based on one’s psychology.
There can be a problem if one’s willingness to take risks is greater than the ability to take risks. While the other way around may deprive you of profitable opportunities.
Acknowledge Your Investment Biases
Another critical but undervalued investing hack is knowing and acknowledging your investing biases. It can be great if you can overcome them with time!
Not exiting loss-making schemes/stocks is known as loss aversion bias. Gathering data to confirm an already existing belief is known as confirmation bias. Extrapolating returns only based on recent stock market events is known as status-quo bias.
Keep Realistic Return Expectations
Expecting a 30-35% return per annum for five years from the Nifty 50 Index is unrealistic. Returns are based on the GDP and corporate earnings growth in the long run.
Invest in the Right Scheme
Investing money in a scheme without even analysing its past risk-return characteristics will not help.
It is only after you take a deep dive into the world of money that you realise that there’s more to it.
The goal can be made easy by considering the above-discussed factors!
Invest Through Teji Mandi
Worried about your wealth creation journey? Well, Teji Mandi is here to help.
The Teji Mandi portfolio allows you to set an SIP. The first instalment equals the minimum investment amount. One can start subsequent SIPs with just Rs 6,000.
For a flat fee of just Rs 149/month, Teji Mandi offers a well-diversified portfolio of 15-20 stocks.
