Rupakumar Pradhan, CFPCM, CWM®

Personal Financial Advisor

Practical Views on Money, Finance & Life .....

How Wealth Is Created?

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How Wealth Is Created?

How Wealth Is Created?
January 10
14:41 2019

Wishing you and your family a magnificent 2019.

I am writing this article after 3 months due to my CWM (Chartered Wealth Manager) Exam preparation. Thank you so much for your believe in “Comprehensive Financial Plan” and CFP professional work and practice. Most important is your TRUST on me as your personal financial planner.

Our Focus- Quality Financial Advice for all.

During a recent interaction with a new investor in my office, he asked me ‘how wealth is created?’

Yes, it is a very valid question for all individuals in India because financial literacy in India is very low and not able to get right financial advice for their financial problems. People should know about wealth creation process and implement it during their life time to achieve financial freedom.

How Wealth Is Created?

It is created out of making investments. You earn, make expenses, save money and invest for the long term that is how wealth is created.

Wealth is created with the help of strong wealth creating assets: every game like cricket or football or hockey etc. has rules to follow and wealth creation is no different. We have to follow the rules of the wealth creation process game and achieve it. Wealth creation has some rules to it and those who understand those rules are able to find cheese (true wealth) in life. Wealth is not about having a lot of money; many people think more money equals to wealth, which is not true. Wealth is all about building capital. Many people confuse high income with being rich. Wealth is something you create from money.

Wealth is about building capital i.e. financial resources. You have to invest in those wealth creating assets where capital is created. You invest Rs. 50,000/- in a Samsung  43 inch LED TV, where no capital is created or you invest Rs. 50,000/- in a diversified equity mutual fund, where capital is created? The capital you build is the resource, which helps you in achieving financial freedom. By the way, I am not against Samsung product! I am not against about your lifestyle.

I have seen many people’s overall net worth sometimes does not match their yearly income even after completing 10-15 years. During all these income generating years, he/ she has not focused to increase his net worth.  We never discuss about net worth. It’s a big problem for those who never understand what is net worth and how to increase his/her net worth. Income does not create wealth, savings create wealth.

You always focus on your income and never on your net worth. Building capital is the game you have to engage with. Start to speak the language of net worth from now onwards. When you meet, your friend’s salary package is discussed, but net worth is hardly discussed. Money masters always focus on building capital; they create more and more financial resources in life.

If you really want to increase wealth, start to see your income as a means and not as an end. Your income is your means to increase wealth rather than as wealth in itself. Start to use your income to grow your wealth. Your wealth will grow not just by the income you earn, but what you do with the income you earn.

Remember, wealth is created only with the help of wealth creating assets. More wealth creating  assets lead to more financial resources. The game of wealth creation depends on which wealth creating asset you are choosing to produce wealth.

Plan to use the money to strengthen your wealth creating assets. Increased income is an opportunity to create wealth. Any income increased, you should increase your savings in wealth creating assets.

Right now income comes in your life because of the job that you have. Now what you do with your saving determines how much wealth you will create.

The money that you save you can either invest that money in secured asset or you will invest your money in growth wealth creating asset.

What is Secured Assets?

Let us understand it.

They are considered safe wealth creating assets. As an investor, you are able to generate risk-free return in a few security assets. Some examples of security assets are Fixed Deposits, Recurring deposits, Sukanya Samruddhi Scheme, KVP, Senior Citizen Savings Scheme, Govt. Bonds, PPF, Insurance Policies, NSC and Money Market Instruments.

Be clear that here your money is not working hard for you. Here is the focus on preservation of wealth rather than growth, because your real return is not positive (return minus inflation). The inflation itself eats what you earn on these investments.

What is Growth Wealth Creating Assets?

After working with many investors we have identifies three strong wealth creating assets.

  1. Business
  2. Real Estate
  3. Direct Equity or Equity Mutual Funds

Business ~ The first one is business. The strongest is when you own your business. Business is a strong wealth creating asset. If business turnover is Rs. 100 crore, one does not have to worry about children or any other financial goal; it is all taken care off.

Real Estate ~  The second wealth creating asset is real estate. Investing in real estate has become increasingly popular over the last 50 years and has is now a common investment vehicle.

Direct Equity or Equity Mutual Funds ~ The third wealth creating asset  is Direct Equity or Equity Mutual Funds, if you want to produce wealth, your money has to be in one or any of these three wealth creating assets. Here the focus is on growth. Here you can make your money work hard, many of our clients have been able to generate 15%  – 20% CAGR return through growth wealth creasing assets. However just understand that you should educate yourself on how these wealth creating assets work and learn the whole game by yourself.

If you want to produce wealth, start to invest in growth-oriented wealth creating assets. Choose a wealth creating asset that has the potential and capability to make you rich. The fear of losing money makes most investor choose the traditional secured assets.

Pick one strong wealth creating assets and then buy that wealth creating assets with a time horizon of 10-15 years. Money masters source their creating assets continuously no matter where the market goes.

Make a commitment and keep moving…………..

Happy Investing!

“I will tell you the secret to getting rich on Wall Street. You try to be greedy when others are fearful. And you try to be fearful when others are greedy.” ~ Warren Buffett


I am a CERTIFIED FINANCIAL PLANNERCM. For the moment, I have shared my experience growing up with you because it had a tremendous impact on how I do what I do.

If you have a question about your own financial situation please connect with me.  I’d be delighted to try to be of service.

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38 Years SENSEX Return- 16% Per Year. Read it.


About Author



Mr. Pradhan has over 22 years of experience in financial services industry. He was previously working with leading Life Insurance Companies, Broking Firms, Distribution Company, Financial Planning Company and Health Insurance Company. He has cleared several NCFM modules & is also AMFI Certified. His expertise is in Comprehensive Financial Planning, Technical Analysis, Portfolio Management, Investment Advisory, Wealth Management & Business Development.

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