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Career building needs a lot of consistent effort and before that a good education. In a way, career is an investment you make in yourself, and it rewards you with money and fame. However, while you are investing time and energy in your career, don’t forget to build wealth as well.
Wealth building is a process that involves earning, saving, accumulating funds that help keep you and your loved ones safe against unforeseen circumstances and financial emergencies.
Why Focus on Wealth As Well?
You have plenty of reasons to focus on wealth building while you raise the ladders of career progress - Family, financial goals and responsibilities and most of all, retirement. However, wealth building is not just about meeting these financial goals.
You need to build wealth if you want to progress in your career. Here are the four situations where your saving habits will define your progress:
1. Constant Feeling of Confidence or Despair
Wealth brings confidence, and that is every bit as true as mentioned. If you have been consistently saving and investing money, you build wealth as the years pass.
2. Leverage Outstation Opportunities
Many times, you will have the opportunity to attend outstation customer calls and meetings early in your career. Some of these actions require you to shell out the money first. No doubt, your own savings will help.
3. Continuous Education and Skill Upgrade
In modern times, changes are so frequent that you often do not have the opportunity to get enough via corporate training. So, you need to spend some money on self-education. Also, postgraduate courses like executive MBA can propel your career on a better trajectory. But these courses may need considerable financial resources.
4. Happy to Work vs. Have to Work
Having your bank account full and a wealth pool at your side can make you surprisingly resistant to stagnation, and more creative in your career. The money can remove the lid of ‘have to work’ and turn your career into a ‘happy to work’ journey.
5. Career Change due to Market Conditions
Although this scenario is completely different from all the others, it is a practical condition. Sometimes, you may want to switch to a different profession or completely different work profile or start a business. Also, market situations may turn your role too risky and you may have to reskill to continue being relevant on the earning scale.
Investing Habits to Develop for Career Growth
You need to have a plan if you want to build wealth without being frustrated with constant lack of money. Also, the best time to develop the plan was when you started earning. However, don’t give up hope yet, the second-best time is now.
You need to follow a set process to prioritise your needs, goals and aspirations so that one does not affect another. Here’s a step by step process to build wealth in the most useful way:
Step 1: Think and List All Your Financial Goals
You need to think of those financial goals which apply to you as of now, and those which you would want to achieve for yourself. For example, if you are single, marriage expenses could be a financial goal for you, but child education will not be. Similarly, retirement will always be your goal regardless of your life-stage.
You will need to define each goal in the following manner:
If you have children, include there higher education and marriage goals too.
Step 2: Plan for Contingencies
This is an extremely important step if you already have a family and you are investing in their financial goals. You need to do the following for a good contingency plan:
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Term plan like iSelect Smart360 from Canara HSBC Life Insurance combines both terminal health and life cover benefit under the same plan. So, with iSelect Smart360 Term Plan, you do not need to buy a separate critical health cover.
Step 3: Select Investment Plans
You will have three different types of goals to invest for:
Investment Plans for Short-Term Goals
If you look at the investment options for short term goals, it’s hard to find investments which are going to save you a lot of tax and provide stable growth. For an investment period lower than five years you can invest in the following options:
Also, if you hold the fund units for more than three years your returns from the fund are eligible for indexation before tax. Meaning the capital gain will be reduced by the inflation of the period, before tax.
Investing for Long-Term Goals
Long-term goals give you more choice and freedom to invest in aggressive portfolios. Regardless of your age and risk profile, it pays to have about 50% of your total wealth invested in fixed income instruments like – debt funds, PPF, etc. while the other 50% can be divided into equity and other assets like precious metals.
Long-term investments offer better tax-benefits both at the time of investment as well as maturity. Investment plans like ULIPs from life insurers can help you save for your goals completely tax-free.
You should use ULIP plans for the child’s financial goals as it provides the following benefits:
Recommended Reading - Goal-based investing
Investing for Retirement
Retirement goal investments need to be a mix of at least two investment instruments – NPS or EPF and ULIPs. Here’s why:
NPS and EPF will force you to invest in an annuity plan to generate monthly income. However, the pension income from an annuity plan is taxable at the slab rates. That is why adding ULIP to your retirement goal could be beneficial in lowering your post-retirement tax outgo.
Thus, not only build a career for yourself, but build a fulfilling career which brings prosperity and wellness to you and your family.
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