Easy Hacks for Salaried Individuals to Build Wealth

A sad notion we carry in our brains since adulthood is that “the only path to becoming rich is by inheriting wealth”. Interestingly, this fact is not wrong. Still, it’s not the ONLY path to be so. You can call it the shortcut method.

What I am trying to say is even if you belong to the 9-5 working crowd, you can still generate a hefty wealth. And no, a fairy godmother won’t jump into your dreams and ask about your hidden desires. 🧚

All you need is a foolproof plan to help you get rich without facing tremendous losses. So, are you ready to get rich?

Defence & Offence Tactics: Hacks to Getting Rich

The trick for this can be bifurcated into two different categories. I like to call it the “Defence & Offence Tactics”. As the name suggests, the Defence tactic means defending one’s existing capital to make it long-lasting and secure.

The Offence tactic means attacking the right options for increasing said capital. You can call it whatever you want, so let’s learn how to utilise these two categories to generate wealth.

The First Step: Activating the Defence Tactic

Before you get on with the plan of “getting rich”, you must ensure the safety of your existing wealth. We all know how fickle the stock market is. The tug-of-war to be bullish or bearish can make anyone rich or poor in seconds. 🪢

Plus, inflation, like a nasty rash, keeps on increasing every year and depreciating the value of your money without mercy. What value the zeros in your bank account hold today would be much less in the next few years.

But, what if I told you that you can utilise these above worries in your favour? 😌

It’s important to secure your hard-earned capital with a shield to avoid any harm coming to it. Don’t worry! Just follow these 3 teenie-tiny steps, and you will be set. 🤏

Step 1: Utilising 50-30-20 Rule

If you are a regular Insider reader, you must know this rule well. (Do let me know if you are not a regular and why in the comments section below. 💬)

So, the 50-30-20 Rule means compartmentalising one’s salary into 3 different sections to ensure a comfortable, fun, and secure lifestyle.

50% For Needs
30% For Wants
20% For Savings/Investments

Follow this rule religiously, especially the 20% portion, as it will be the fodder for your future’s wealth.

Step 2: Insure Your Life, Family & Future

This step can’t be said many times. People think that investing in life, term, or health insurance is a waste of money. They often have the idea of saving up those few lakhs and increasing it over time by investments. But, as Finology's Co-Founder Pranjal Kamra says, you are missing one crucial factor.
We believe that we have those years to utilise the amount and increase our investments. But life and health are not guaranteed, and unfortunately, anything can happen in time. Here’s why getting life and health insurance is essential.

You would be capitalising on yourself by getting good policies, as the amount would come in handy during hard times. So, get that policy right now!
Check out the insurance plans and choose the one that fits you like a glove.

Step 3: Emergency Fund

Just like insurance, every individual must have an emergency fund for unforeseen circumstances. Aim for 3-6 months of your living expenses to cover unexpected costs.
A 3-month emergency fund in case of a secondary earning member and a 6-month emergency fund for primary earning members is considered ideal.

Once you have created an emergency fund, just forget about it by placing it in a secure position. Recurring bank accounts, Fixed Deposits (FD), etc. are wise choices. This fund provides security and prevents the need to dip into investments during emergencies.

The Second Step: Game On with Offence Tactic

Now that you have provided secure coverage to your family and future, it’s time to step up your game. This tactic will include investments, savings, schemes, and many other options that will help you constantly increase your capital.

And the best part? The risks would be minimal, giving you that layer of protection we have discussed earlier. 🦺

Step 1: Retirement Plan

What do you earn? A world tour? A big house? To finally purchase your long-awaited shopping cart or TBR list? (Okay! The TBR list is all me, but if you are also a book-lover like me, then I would like to be your friend. I’m Only One DM Away. 🎵)

Okay, back to the topic. Whatever might be your goal, planning a luxurious and comfortable retirement must be involved. Amazingly, your retirement plan is another way to become Richie Rich.

Don’t believe me? Just see the facts! 🫴

Gold: SGB Instead of Physical Gold

Sure! Physical gold has its perks, but its storage comes with a lot of baggage, both literally and figuratively. Sovereign Gold Bond (SGB), on the other hand, has no such obligations.

Plus, you will get a 2.5% interest return on your investments, which will help your money become much more significant than you invested. And let me tell you, for the past few years, SGB has given double-figured profits to its investors each year.

Amazing, right? RBI just launched the newest SGB Scheme Series III. Click here to learn about its pros and cons.

National Pension System: Ultimate Retirement Scheme

The ultimate retirement planning scheme, the National Pension System (NPS), is a go-to option for millions of Indians. The scheme sees a 22.88% increase in its subscribers on a year-to-year basis.

If you are not a part of this scheme, then you are missing out. Let me tell you why!

a. You are failing to receive a tax benefit of ₹2 lakh.
b. You are missing out on the versatile investment options suitable for all kinds of investors.
c. You won’t be a part of the crowd receiving a regular stream of income in retirement days.
d. You are giving up on the opportunity of investing in a low-risk retirement plan.

Don’t want to give up the above-mentioned options? Then, read the article National Pension System: Easy Retirement Planning and prepare your plan now.

Step 2: Stock Market Investments

It's finally time for the investments portion of the "getting rich" plan. Let's begin with… 

Mutual Fund

There is no better way for beginners to learn stock market investments than mutual funds. They are much more convenient, easy to understand and low in risk. Plus, you can start investing with the most basic of amounts possible.

Even ₹500-₹1,000 would be a good enough sum to invest in mutual funds.

Mutual funds are a great way to invest your money in a diversified portfolio of stocks, bonds, and other assets. They are managed by professional fund managers who buy and sell securities on your behalf.

This is, hence, a great option for investors who don't have the time or expertise to manage their own investments.

Equity

Finally, the method many believe to be another shortcut for becoming rich. Investing in equity comes with a high risk and high reward tag. The stock market is unstable, and learning its levels can take years. Therefore, it's advised to take one’s time and never rush.

Here are a few tips to follow if one wishes to invest in equity and other instruments:

a. Start early: Time is your greatest asset. The power of compounding means starting early, even with small amounts, significantly increases wealth over time.
b. Diversify: Don't put all your eggs in one basket. Spread your investments across different asset classes like stocks, bonds, real estate, and mutual funds to minimise risk.
c. Do your research: Understand the investment options available and research before making any decisions. Look for reputable platforms and seek professional advice if needed.
d. Be patient: Never rush into buying or selling stocks you see others buying or selling. Observe the movements as per your financial plans and devise a plan wisely. Losing patience and making rash decisions could be the cause of a huge loss in the stock market.

When you combine both the tactics, the savings and the investments, you will have a fat corpus for your future.

The Bottom Line

Remember, building wealth takes time and discipline. Be patient and adapt your approach as needed.

It’s also essential to follow up on your original financial plan religiously.

And last but not least, enjoy the journey! ☺️