Managing Wealth with a Simple Lifestyle and a High Salary of 45 Lakh Rupees per Annum

Managing wealth is a crucial skill, especially when you have a high salary but a simple lifestyle. In this article, we will discuss effective strategies for managing your funds, making the most of your financial resources, and planning for the future. If you're currently earning around 45 lakh rupees per annum but are currently living a simple life, here are some key steps to follow:

Seek Professional Financial Management Services

One of the most important steps in managing wealth is to seek professional financial management services. If you have a portfolio of at least 25 lakh rupees, you can consider seeking portfolio management services. These services typically do not charge based on the corpus size but rather on a flat fee. A financial planner can help you set up a portfolio consisting of equity, debt, fixed deposits, liquid funds, or pension funds that suit your specific needs. Your chartered accountant or tax advisor can also handle the job.

An experienced financial advisor will continuously review your portfolio and reallocate assets to ensure consistent performance, aiming for a Compounded Annual Growth Rate (CAGR). Regular reviews and asset reallocation can help you maintain and grow your wealth effectively.

Investments vs. Spending

When it comes to managing your finances, the most critical principle is to invest first and spend later. This means that you should allocate a significant portion of your salary towards investment, and only use the remainder on necessities and lifestyle expenses.

It's important to differentiate between saving and investing. While saving is essential, it’s investing that can help grow your wealth over time. For example, if you have a salary of 13.4 lakh rupees after tax, and you save 70,000 rupees per month, you can generate a corpus of 14 lakh rupees in a decade with an expected CAGR of 8%. This money can act as a buffer during times of unemployment or financial instability.

Invest Wisely and Stay Away from Debts

The key to managing wealth is to invest wisely and avoid unnecessary spending. Here are some tips to help you manage your finances effectively:

Avoid unnecessary purchases: Do not buy things that you do not need. Focus on investing in assets rather than liabilities. While a car might seem like an asset, it is often a liability due to maintenance and depreciation costs. Buy assets, not liabilities: Assets are things that can appreciate over time. Houses, while often considered assets, can also become liabilities in many cases. Be very clear on the difference between assets and liabilities to make sound financial decisions. Avoid credit: Try to stay away from credit and credit card debts. While credit can be useful in emergencies, it can also be a trap. High credit card interest rates can quickly accrue and tie you into a cycle of debt. Be cautious with EMI: Many people in jobs become EMI slaves. Make sure that your EMI payments do not exceed your financial comfort level, allowing you to switch jobs if necessary. Live within your means: Ensure that your lifestyle expenses do not exceed your monthly income. If you need to buy something, consider whether it's a necessity or a want. Prioritize investments over unnecessary expenses. Regular financial review: Regularly review your financial plans and adjust them as needed. This could involve seeking professional advice from an advisor or chartered accountant to ensure you are on the right path.

In conclusion, managing wealth effectively requires a combination of professional advice, disciplined spending habits, and a strategic approach to investments. By following these guidelines, you can ensure that your wealth is managed well and grows over time, providing you with a secure financial future.