Everything is possible; this is truer today than it was ever before. A home in Malabar Hill? Audi? BMW? Annual holiday in Morocco and similar exotic destinations each year?

Following are two questions to which you must answer in the positive, not only to proceed further but also to ensure that you are able to achieve your financial aspirations whatever they may be:

Getting more…

The mantra today is to “get more out of life” at every stage of life, whether it is to provide the best future for children or a very comfortable retirement, or the ability to spend and buy what we desire, or simply living and enjoying life. For e.g. A holiday abroad was a lifetime dream for most Indians and today we think in terms of a long weekend in Venice or an evening in Paris literally. The cost is perhaps 2-3 months salary and installments tend to make life easier. In short, things are far more achievable today than before and we want even more. There is but one flip side to all this… that the traditional investment returns have shrunk and the old investment strategies will just not work going forward. The obvious thing to do then is to look at alternate investment strategies for wealth creation and those are quite complex today and will get even more complex tomorrow.

Consider this:

Here is a simple thumb rule:

If we are invested in any product providing investment return equal or near the prevailing rate of inflation, we are most definitely eroding our wealth. The impact will only be seen much later and which is why most of us wanting to invest into so called “SAFE” products such as bank deposits, traditional insurance policies, bonds etc. do not realize that these “SAFE” products in reality might be wealth destroyers. From this perspective, “Are these “SAFE” products really SAFE and in our best interest?”

However if we still decide to play it safe in life, we've pretty much decided that we don't want to grow anymore and financial aspirations either have to be compromised or may have no scope in our life.

But… if we feel the strong zeal to fulfill our aspirations, then at this stage we must allow for a bit of financial risk to come into our lives. The new words we must understand are risk & risk management. These would be the most important words going forward. Given that we understand these words very well in the context of our own work and profession, we now need to only apply them to our money & financial affairs. In order to fulfill financial aspirations one also needs to give due consideration to many other aspects of the overall investment strategy such as cash flow & budget management, hedging, asset allocation, use of equity, mutual funds, commodities to name a few.

Consider this:
Say an investment Rs. 1 lac was done about 8 years ago in a diversified equity fund, the value of the Rs. 1 lac would be approximately;

This is not fiction. There are many mutual fund schemes that have delivered such returns. As the time frame of the investment becomes longer the perceived “RISK” reduces significantly. Such strategies have the potential to enable us to fulfill our financial aspirations.

Having said this it does not necessarily mean that one should not invest in bonds nor does it mean that one should put all the money into equity investments. A good financial plan must analyze merits of investment products in light of the aspiration to be achieved. Thereafter a sound portfolio gets created which delivers returns as desired.

Some quick tips…

We live in a time that is highly rewarding, where changes are constant and transformation rapid. Opportunities are being generated and will keep re-generating over time letting our aspirations touch the skies and even higher.