Wealth Building Simplified – An Easy Guide To Financial Planning

Everyone wants to build wealth. Some people find this very interesting and devote a great deal of time and effort in understanding and trying our various options to build wealth. But a lot of others who want to build wealth don’t have the inclination or time to go into the details to make great investment decisions. What is needed is a simple and systematic way to build wealth at a decent rate of return (willing to sacrifice some spectacular returns for the benefit of minimum efforts!) that does not demand too much attention from the potential wealth builder. No worries; there are a few fundamental things that one should keep in mind and as long as this is taken care of, wealth building can be done with a minimum of fuss!

I have come up with 5 C’s that one should keep in mind for a peaceful and successful wealth building effort:

1. Compounding

Explanation: There are 2 way to provide interest on an investment; Simple and Compound interest. Simple interest is when an amount is paid as interest on the initial amount (Principal) at a fixed percentage. For e.g, for Principal of 100, Simple Interest for 2 years at 10% per year would mean 20 as interest (10 per year multiplied by 2 years).
Compound interest is when the Interest earned is added back onto the Principal and the next year’s Interest is paid on the enhanced amount. For e.g, for Principal of 100, Compound Interest for 2 years at 10% per year would mean 21 as interest (10 for 1st year and 11 for 2nd year).

Bottom-line: Compounding is GOOD! It means the money works harder and earns more. Just to drive the point home, consider this: An amount of 100 invested at an interest of 10% per year on Simple Interest would end up as 200 at the end of 10 years while if the same is invested at 10% per year Compound Interest, it would end up as almost 260 after 10 years! So, always give preference to an investment where compounding applies!

2. Continuity

Explanation: Whether one invests in the Stock Market or in Bank deposits, the best way to do regularly over a long period of time as opposed to big chunks of stop-start investments. Therefore, aim to invest continuously over a longish time frame, say 25 years of your working life, from the time you are 25 years old till you are 50. Needles to say, the earlier you start and the longer you do it, the more wealth you will end up with.

Bottom-line: Do it over a LONG TIME FRAME! And invest continuously and regularly over this time frame. As much as possible, do not disturb the investments.

3. Consistency

Explanation: Along with continuity, fix and invest a consistent amount at consistent time intervals, say every month. A consistent amount (at least 10% of monthly income) invested every month over the long time-frame discussed above will ensure decent returns and a very good corpus.

Bottom-line: Just TOP-UP every month and let compounding work its magic!

4. Calm

Explanation: If the above C’s are followed, then the most preferred investment avenue is Equity investments. By their nature, equity markets are fickle and will move up and down. But long term investors should not really worry about this as over a long time horizon (10 years or more), equities are almost certain to give positive returns. So, invest in equities for the long term and keep CALM!

Bottom-line: Traders who want to make some margins everyday are the ones who should worry about the market movements everyday. For Continuous and Consistent investors, the short term market movements are best ignored.

5. Caution

Explanation: Be wary of new investments ideas that are thrown your way. If you don’t understand it, ruthlessly avoid it.

Bottom-line: Caution is better than regret. So, err on the conservative side.


An investment option that usually combines all the above C’s is most of the good equity mutual funds. So, all one has to do is pick a good equity mutual fund, set up a systematic investment plan with this fund that ensures a fixed amount of money is invested every month directly into this from the bank account and then sit back and see it grow. Most funds charge some fees for managing the investments but this is a worth it given the convenience offered. Of course it is recommended that you track the funds’ performance every half-year, if not every quarter and if you see that the performance is slipping up consistently over a few quarters, then it is time to switch funds and set up a systematic investment plan with a different fund house. Another safe option to consider is Index funds which are linked to the market index. The management fee is very low but this will give just the market rate of return and nothing more. This is not bad but an actively managed fund, for a slightly higher fees, usually out-performs the market on most occasions. Good luck for a successful wealth building exercise!

Planning to Hit the Road in Retirement

One of the great benefits of retirement is having the time and freedom to pursue interests that didn’t fit into your schedule when you worked 40 or more hours a week. If extensive travel is on your bucket list, you’ll want to account for the cost of it as you’re planning for retirement. Here are five tips to help you prepare to hit the road when you’re ready to retire:

1. Include travel as a line item in your retirement plan

Without the funds to pursue travel, you likely won’t get too far. As you plan for your living expenses in retirement, you need to account for the impact that travel costs will have on your budget. Depending on the extent of your travel plans, it could add up to a significant sum. Take a hard look at what you might be spending on an annual basis, and if necessary explore some less expensive options to get the most out of travel in retirement.

2. Aim to stay in good health

To be able to handle the rigors of travel, it helps to be in good physical shape. Just as you need to plan ahead to have your finances in order, it’s also important to maintain your physical health. In the years leading up to retirement, focus on healthy eating and regular exercise so you’ll be prepared for what could be a more active lifestyle in retirement.

3. Don’t delay your plans

Once you reach retirement age, you have the time to travel, but you don’t want to wait too long to get going. Most retirees try to plan their biggest travel excursions in the early years of retirement. They are in better condition and have more stamina to manage the physical challenges that go with major travel. As a result, some people choose to spend more money in the early years of retirement, and then trim lifestyle expenses later in life when travel has subsided.

4. Determine your travel priorities

Where do you want to go in retirement? If you are married, are you and your spouse interested in the same destinations? Do you hope to join up with tour groups or do you prefer traveling on your own? Start making a list of where you want to go and try to determine what the budget may be to help you make an accurate financial estimate.

5. Be organized and ready

If you are planning to spend time overseas, make sure you have a current passport ready to go well in advance. If countries you are visiting require a visa for entry, make sure you know what needs to be done to make that happen. If you plan to travel across the country in an RV, do your research ahead of time to see what type of rig will work best for your needs. In short, don’t let the first day of retirement arrive without having a plan so you can begin traveling right away.

The key point for anybody with serious travel ambitions in retirement is to go beyond dreaming and do some significant preparation in advance. That includes saving money, taking care of your health and researching potential trips so you make the most of your travel in retirement.