One of the foremost factors that differentiate the wealthy from the rest is that they make money work for them. In short ..money making, money for you is the mantra. However, what does it mean? And how, you can achieve it?
A stimulating story below will explain to understand better from ‘The Parable of the Pipeline’ by Burke Hedges
This story is of 2 friends who want to be wealthy- Pablo and Bruno. The two friends were on a quest for financial independence in their lives.
One day, they were given a task of carrying the water from the mountain to a village. While Bruno was content with the money he earned from the task, Pablo felt quite exhausted at the end of the day. After a few weeks, an idea struck upon him. He thought of building a pipeline which can carry water on its own. Pablo discussed this idea with Bruno. But Bruno in his hindsight spurned the idea, but un-deterred Pablo, soon, started building the pipeline in his spare times. In the meantime, Bruno bought a bigger house and cow for himself.
Both worked hard, one to carry water & other to carry water as well as build pipeline in meanwhile. Days, months & years passed by and Bruno’s capacity to carry water reduced day by day. But Pablo was able to complete the pipeline and now instead of using buckets to deliver water, his pipeline did the work for him. He earned a lot of money without any efforts.
So what does this story teaches us? Well, no doubt that creating pipeline was a time-consuming but strategic process; it helped Pablo to make money work for him without any efforts eventually. He had unquestionable money flow for life time
Now the question is “Can one build such model while investing in the financial market?”
For you to reach financial independence, it is important to make money work you even while you take a nap. Here are three simple rules to manage your money so that it can multiply on its own.
1. Ideate a strategy:
A) In mutual funds get started by way of investing in equity mutual funds via the automatic SIP route. In this way, a fixed amount will be automatically debited from your account every month towards your investments goal.
B) Transfer you assets like FD, unused real estate or Gold into lump sum investment in Hybrid mutual funds, more oriented towards equity, allow it grow for 2/3 years and then start swp at a later date.
2. Power of compounding:
Investor makes a major mistake of buying, selling and churning the equity investments with short-term view. This is the biggest unbecoming investor’s hard earned money invested. An equity market offers the biggest 8th wonder of the world called on the ‘Power of Compounding’. Stocks purchased in equity mutual fund capitalize on hidden game of the ‘Power of Compounding’. Power of compounding multiplies your money with time, to create massive wealth.
3.Plan the GOAL:
Make a list of all your goals. Invest for each goal & choose proper assets wisely for each goal. Ensure that each asset eventually can give income streams like swp for mutual funds, dividends for stocks, rent for house or gala. Basically investments that help your goals later develop streams of passive income that can add to your regular source of revenue. Passive income will help you to pursue things which you love instead of worrying about the bills.
You can start with lump sum investments or equated amounts on regular basis, which will help to multiply the money in long run. Even though all the above-mentioned ideas may demand an upfront payment at the start, it will definitely help you to multiply your money in the long run.
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