Value Research explains time-tested formula to making more wealth in 2025

Starting with SIPs, maintaining a disciplined approach, and protecting your wealth with insurance are foundational elements of successful investing.

As we step into the new year, financial experts at Value Research emphasize that building wealth is not a sprint but a marathon. It requires consistent effort and discipline, regardless of market fluctuations. In an era filled with investment noise, sticking to tried-and-true strategies remains essential for long-term financial success.

 

Systematic Investment Plans (SIPs) are touted as one of the most effective tools for wealth creation. By committing to regular monthly investments, such as a Rs 10,000 SIP in a diversified equity mutual fund, investors can cultivate a disciplined approach to investing, noted Value Research.  This strategy not only helps smooth out the impact of market volatility but also encourages a habit of saving.

 

 

Rs 10,000 monthly SIP in an average diversified equity (flexi-cap) mutual fund has grown to Rs 9.6 lakh in 5 years, and Rs 1.1 crore in 20 years.

 

Now, if you step up your SIP by 10 per cent every year, you could grow your corpus to Rs 2.2 crore in 20 years, instead of Rs 1.1 crore.

 

The earlier you start, the less you'll need to invest and the more compounding works its magic.

 

2. Invest as per your investment time horizon 

Before diving into investments, identify your financial goals and their time horizon. This will help you determine how much risk you can take and guide your asset allocation.

For long-term goals (5+ years): The longer the horizon, the more equity exposure you can have. Conservative investors may prefer a 70:30 or 75:25 equity-to-debt allocation, while experienced investors comfortable with market volatility can consider up to 100 per cent equity. 

 

For medium-term goals (3-5 years): A mix of equity and fixed income can provide growth while balancing risk.Conservative investors can opt for an all fixed-income allocation, while those flexible with timelines may include a pinch of equity component.

 

For short-term goals (<3 years): Stick primarily to fixed-income instruments like debt funds or fixed deposits to minimise risks. Avoid equity exposure as short-term market volatility can significantly impact your returns.

 

3.Protect Your Wealth with Insurance

 

Building wealth isn't just about growth; protecting that wealth is equally important. Two key types of insurance can safeguard your financial future:

 

Life Insurance: A pure term life insurance plan ensures that your dependents are financially secure in case of unforeseen events. Experts at Value Research recommend opting for coverage that is at least 10-15 times your annual income. For example, a Rs 1 crore policy for a 30-year-old non-smoker typically costs around Rs 11,000 to ₹13,000 annually, making it both affordable and essential for long-term financial security.

 

Health Insurance: Medical emergencies can derail even the best financial plans. Comprehensive health insurance helps cover unexpected medical expenses, allowing you to maintain your investment strategy without financial strain.

 

4. Stop chasing trends and focus on consistency

Every year, there's a "next big thing" that tempts investors: crypto, NFTs or speculative stocks. However, the data is clear: sticking to tried-and-tested investment options like equity mutual funds delivers better results over time.

" Over the last 15 years, diversified equity (flexi-cap) mutual funds have averaged over 13 per cent annual returns, despite multiple market corrections. The reality? Get-rich-quick schemes often turn into get-poor-quicker stories. Focus on consistency, not trends," said Value Research in a note. 

 

5.  Automate your investments and review regularly

Automation removes the emotional element of investing, ensuring you never miss an instalment. Set up SIPs (systematic investment plans) for a hands-off approach and let compounding do the heavy lifting.

 

"Whether it's 2025, 2030 or 2040, the principles remain the same. So, stick to your plan, step up your contributions and protect your wealth with insurance," said Dhirendra Kumar of Value Research.