Principles of Building Wealth

October 19, 2023

Mega-cap stocks and a robust performance in the articial intelligence sector has the market on a hot streak. Learn more here.

Building wealth is a goal that many people aspire to, but it can often seem like an overwhelming task. It takes time, effort, and discipline to be successful with this goal, so don’t be lured by get-rich-quick schemes and too-good-to-be-true opportunities that can send you down a dangerous path.



The good news is that there are principles and strategies that can help anyone build and preserve wealth over the long term. And, the earlier you start putting these into practice, the better your chances of success.

Below, we have outlined several key principles for building wealth, including setting goals and developing a plan, investing in education and skills, managing debt, saving and investing, protecting your assets, understanding the impact of taxes, and building a strong credit history. In this article, we will take a closer look at each of these principles and how they can help you achieve your financial goals.



Building wealth is a goal that many people aspire to, but it can often seem like an overwhelming task. It takes time, effort, and discipline to be successful with this goal, so don’t be lured by get-rich-quick schemes and too-good-to-be-true opportunities that can send you down a dangerous path.

The good news is that there are principles and strategies that can help anyone build and preserve wealth over the long term. And, the earlier you start putting these into practice, the better your chances of success.

Below, we have outlined several key principles for building wealth, including setting goals and developing a plan, investing in education and skills, managing debt, saving and investing, protecting your assets, understanding the impact of taxes, and building a strong credit history. In this article, we will take a closer look at each of these principles and how they can help you achieve your financial goals.



1. Earn Money

The first thing you need to do is start making money. This step may seem elementary but is the most fundamental one for those who are just starting out. You’ve probably seen charts showing that a small amount of money regularly saved and allowed to compound over time eventually can grow into a substantial sum. But those charts never answer this basic question: How do you get money to save in the first place?

There are two basic ways of making money: through earned income or passive income. Earned income comes from what you do for a living, while passive income is derived from investments. You may not have any passive income until you’ve earned enough money to begin investing.

If you are either about to start a career or contemplating a career change, these questions may help you decide on what you want to do—and where your earned income is going to come from:



  1. What do you enjoy?
    You will perform better, build a longer-lasting career, and be more likely to succeed financially by doing something that you enjoy and find meaningful. In fact, one study found that more than nine out of 10 workers said they would trade a percentage of their lifetime earnings for greater meaning at work.
  2. What are you good at?
    Look at what you do well and how you can use those talents to earn a living.
  3. What will pay well? Look at careers using what you enjoy and do well that will meet your financial expectations.
  4. How do you get there?
    Learn about the education, training, and experience requirements needed to pursue your chosen career options.

Taking these considerations into account can help put you on the right path.


Tip A good way to maximize your earning potential is to invest in your education and skills. Getting advanced academic degrees, industry-specific certifications and training programs are all useful to build your human capital.



2. Set Goals and Develop a Plan

What will you use your wealth for? Do you want to fund your retirement—maybe even an early retirement? Pay for your kids to go to college? Buy a second home? Donate your wealth to charity. Setting goals is an essential first step in building wealth. When you have a clear vision of what you want to achieve, you can create a plan that will help you get there.

Start by defining your financial goals, such as saving for retirement, buying a home, or paying off debt. Be specific about the amount of money you need to achieve each goal and the time frame in which you hope to achieve it.

Once you have set your goals, you should develop a plan for achieving them. This may involve creating a budget to help you save more money, increasing your income through education or career advancement, or investing in assets that will appreciate in value over time. Your plan should be realistic, flexible, and focused on the long term. Regularly review your progress, and make adjustments as needed to keep yourself on track.

3. Save Money

Simply making money won’t help you build wealth if you end up spending it all. Moreover, if you don’t have enough money saved up for your near-term obligations (like bills, rent, or mortgage) or for an emergency, then you should prioritize saving enough above all else. Many experts recommend having several months’ (e.g., three to six) worth of income saved up for such situations.

To set more money aside for building wealth, consider these moves:

  1. Track your spending for at least a month
    You might want to use a financial software package to help you do this, but a small, pocket-size notebook could also suffice. Record your every expenditure, no matter how small; many people are surprised to see where all their money goes.
  2. Find the fat and trim it
    Break down your expenditures into needs and wants. Food, shelter, and clothing are obvious needs. Add health insurance premiums to that list, along with auto insurance if you own a car and life insurance if other people are dependent on your income. Many other expenditures will merely be wants.
  3. Set a savings goal
    Once you have a reasonable idea of how much money you can set aside each month, try to stick to it. This doesn’t mean that you have to live like a miser or be frugal all the time. If you’re meeting your savings goals, feel free to reward yourself and splurge (an appropriate amount) once in a while. You’ll feel better and be motivated to stay on course.
  4. Put saving on automatic
    One easy way to save a set amount each month is to arrange with your employer or bank to automatically transfer a certain portion of every paycheck into a separate savings or investment account.
  5. Find high-yield savings
    Maximize the payoff of your savings by shopping for savings accounts that have the highest interest rates and lowest fees. Certificates of deposit (CDs) can be a good savings option if you can afford to lock up that money for several months or years.

Keep this in mind, too: You can only cut so much in costs. If your costs are already down to the bone, then you should look into ways to increase your income.


Important One of the best ways to be sure you are saving enough is to set a spending budget. Cut back on excess and unnecessary spending, and put that money in the bank instead.


4. Invest

Once you’ve managed to set aside some money, the next step is investing it so that it will grow. Money put in savings is important, but the interest rates credited on deposit accounts tend to be very low, and your cash risks losing purchasing power over time to inflation.

Perhaps the most important investing concept for beginners (or any investor, for that matter) is diversification. Simply put, your goal should be to spread your money among different types of investments. That’s because investments perform differently at different times. For example, if the stock market is on a losing streak, bonds may be providing good returns. Or if Stock A is in a slump, Stock B may be on a tear.

Mutual funds provide some built-in diversification because they invest in many different securities. And you’ll achieve greater diversification if you invest in both a stock fund and a bond fund (or several stock funds and several bond funds), for example, rather than in just one or the other.

As another general rule, the younger you are, the more risk you can afford to take, because you’ll have more years to make up for any losses.

Types of Investments

Investments vary in terms of risk and potential return. As a general rule, the safer they are, the lower their potential return, and vice versa.

If you aren’t already familiar with the various types of investments, it’s worth spending a little time reading up on them. While there are all kinds of exotic investments, most people will want to start with the basics: stocks, bonds, and mutual funds.

  • Stocks are shares of ownership in a corporation. When you buy stock, you own a tiny slice of that company and will benefit from any rise in its share price, as well as any dividends that it pays out. Stocks are generally seen as riskier than bonds, but stocks can also vary widely in risk from one corporation to another.
  • Bonds are like IOUs from a company or government. When you buy a bond, the issuer promises to pay your money back, with interest, after a certain period. As a very general rule, bonds are considered less risky than stocks, but with less potential upside. At the same time, some bonds are riskier than others; bond-rating agencies assign them letter grades to reflect that.
  • Mutual funds are pools of securities—often stocks, bonds, or a combination of the two. When you buy mutual fund shares, you get a slice of the entire pool. Mutual funds also vary in risk, depending on what they invest in.
  • Also, exchange-traded funds (ETFs) are like mutual funds in that each share holds an entire portfolio of securities, but ETFs are listed on exchanges and trade like stocks.

Warning Before you start investing, make sure you have sufficient savings and some money set aside to handle any unexpected financial emergencies.


5. Protect Your Assets

You’ve worked hard to earn your money and grow your wealth. The worst thing could be to lose it all due to a sudden tragedy or unforeseen event. A fire can burn down your house, a car accident can cause damage and medical bills, or premature death can mean a loss of future income.

Insurance is a key piece of building your wealth because it provides protection from these and other hazards. Home insurance will replace your home and belongings in case of a fire, auto insurance will make you whole after a car accident, and life insurance will pay your beneficiaries a death benefit in the case of an untimely death. Long-term disability insurance is another type of policy that will replace your income if you become injured, ill, or otherwise incapacitated and unable to continue working. Even young, healthy people should consider insurance products since they tend to become more expensive as you grow older. That means even if you are 25 years old and single, buying life insurance then could be a lot more cost-effective than when you are 10 years older with a partner, children, and mortgage.

6. Minimize the Impact of Taxes

Taxes are an often-overlooked drag on your wealth-building efforts. Of course, we are all subject to income tax and sales tax as we earn and spend money, but our investments and assets can also be taxed. That’s why it is essential to understand your tax exposures and develop strategies to minimize their impact.


7. Manage Debt and Build Your Credit

As you build wealth, you’ll start to find it worthwhile to take on debt to fund various purchases or investments. You may pay for things with a credit card to earn points or rewards. You might apply for a mortgage for a home or second home, a home equity loan for home improvements, or an auto loan to purchase a car. Maybe you’ll want to take out a personal loan to help start a business or invest in someone else’s.

However, it’s important to manage your debt carefully—taking on too much debt could impede your progress toward your wealth-building goals. To manage debt, be mindful of your debt-to-income (DTI) ratio and make sure that your debt payments are manageable within your budget. You should also aim to pay off high-interest debt, such as credit card debt, as quickly as possible to avoid paying excessive interest charges. Be wary of variable or adjustable interest rate products like adjustable-rate mortgages (ARMs), or those with balloon payments, as changes to the economy or your personal circumstances can quickly cause those debts to become unmanageable.

Indeed, if you fall into debt, your credit score can be negatively impacted, and if you default on your debts, you could face personal bankruptcy.

Maintaining a Good Credit Score

Building and maintaining a good credit score is an important part of growing and preserving your wealth over the long term. You’ll enjoy a lower interest rate and better terms on your loans if you have a strong credit history and high credit score, which can save you thousands of dollars in interest charges over time.

Here are a few key steps that you can take to maintain a good credit score:

  1. Pay your bills on time
    One of the most important factors that affects your credit score is your payment history. To maintain a good credit score, you should make sure to pay your bills on time, every time. Late payments, even if they’re only a few days late, can have a significant negative impact on your credit score.
  2. Keep your credit utilization low
    Your credit utilization, or the amount of credit you’re using compared to the amount you have available, is another important factor that affects your credit score. To maintain a good credit score, you should aim to keep your credit utilization below 30% of your available credit.
  3. Monitor your credit report
    It’s a good idea to check your credit report regularly to make sure that all the information is accurate and up to date. Today, there are several services that will provide you with a credit report free of charge. Errors on your credit report can negatively impact your credit score, so it’s important to dispute any inaccuracies you find.
  4. Avoid opening too many new accounts
    Every time you apply for credit, it can have a small negative impact on your credit score. To maintain a good credit score, you should avoid opening too many new accounts in a short period of time. Note, however, that if you do not use credit cards or don’t have enough credit lines open, you may fall victim to not having a sufficient credit history. So, open some credit cards and take out some loans, but do not overdo it.

Should I pay off debt or invest?

If you have high-interest debt, such as many credit card charges, it usually makes sense to pay it off before you invest. Few investments ever pay as much as credit cards charge. Once you’ve paid off your debt, redirect that extra money to savings and investments. And try to pay your credit card balance in full each month, whenever possible, to avoid owing interest in the future.

How much money do I need to buy a mutual fund?

Mutual fund companies have different minimum initial investment requirements to get started, often beginning at about Rs 50000. After that, you can usually invest less. Some mutual funds will waive their initial minimums if you commit to investing a regular sum each month. You can also buy mutual fund and exchange-traded fund (ETF) shares through a brokerage firm, some of which charge nothing for opening an account.

What is an exchange-traded fund (ETF)?

Exchange-traded funds (ETFs) are investment pools much like mutual funds. A key difference is that their shares are traded on stock exchanges (rather than bought and sold through a particular fund company). They sometimes charge lower fees as well. You can also buy them, along with stocks and bonds, through a brokerage firm.

While get-rich-quick schemes sometimes may be enticing, the tried-and-true way to build wealth is through regular saving and investing—and patiently allowing that money to grow over time. It’s fine to start small. The important thing is to start, and to start early. Earn money and then save and invest it smartly. Protect your assets with insurance, and minimize your tax exposure.

Remember, building wealth is a journey, not a destination. Celebrate your successes along the way, and don’t get discouraged by setbacks or obstacles. With patience, discipline, and a clear vision of your goals, you can achieve financial success and build wealth over the long term.

Related Articles

Nov 27, 2023

Mistakes You Must Avoid While Applying for a Personal Loan

Nowadays, availing of personal loans has become convenient because of the completely paperless online applications, pre-approvals, and excellent offers on interest rates. However, you need to be very cautious when applying for a personal loan.




If you do not do the due diligence, then rather than solving a financial crisis, the personal loan may create a new one.

Here are the top mistakes that you must avoid when applying for a personal loan.

  1. Not checking your repayment capacity

Many personal loan applicants make the mistake of availing the maximum loan amount they’re eligible for. This mistake can cost you dearly since you’re borrowing a loan amount that may be much higher than you actually require. This will eventually lead to much higher EMIs that you may be unable to repay.


Instead, you should go the other way round. Prepare a budget and calculate exactly how much funds you need from the personal loan. Even if you’re entitled to more, refrain from doing that.


To calculate how much your EMI should be, deduct your monthly expenses from your total monthly income and find out how much money you have left as a surplus. If your EMI is less than this amount, then it won’t be a burden on your finances.


  1. Not Reading the Fine Print

When a lender provides a loan offer to you, make sure you read the agreement thoroughly and carefully. If you do not understand anything, then feel free to ask the representative what exactly it means.


The loan document contains details of all charges like processing fees, foreclosure charges, loan interest rates, etc. Make a note of the charges and read all clauses carefully to avoid problems later.


  1. Not Considering Alternative Lenders

Because of the abundance of lenders providing personal loans, you are bound to get multiple excellent personal loan offers if you just look at alternative lenders rather than simply accepting the first offer. Low-interest personal loans are all the rage, and you may get a better deal if you consider other options.


Comparing offers from different lenders also gives you a look at the other costs that the competition is charging. Processing fees and foreclosure charges may also vary among different lenders. Hence, it is a good idea to assess different loan offers before accepting one.


  1. Hiding Existing Loan Details

Lenders always perform a thorough evaluation of all your past loans and repayment history. Any existing loans you have are already on record, and their details are pulled out when your credit report is created.

Hiding details of your existing loans can put a spanner in the works as far as your personal loan application is concerned. Lenders become wary and doubt your repayment capacity. Thus, they might reject your loan or charge higher interest rates.


  1. Taking a Personal Loan as a Spontaneous Decision

Since a personal loan is a quick and easy way to borrow funds, it can give you a false sense of security as far as your finances are concerned. At the end of the day, a personal loan is another loan and a liability.


Thus, if you’re thinking of taking a personal loan to fulfil your wants rather than your needs, then you may need to think again and give your decision due consideration. It is easy to fall into a financial trap if you get a personal loan just because you needed to buy an expensive gadget or a luxury car.


On the other hand, if you’re indeed short of funds and want to fulfil an emergency expense, then your decision to apply for a personal loan may be the right decision.



Because of the ease of availability of a personal loan, you can easily fall into the pitfall of overlooking basic details and making a decision too soon. Thus, leading to the above mistakes. Ensure you keep the above points in mind when applying for a personal loan and make an informed decision.

Oct 19, 2023

Eye on the Market Letters to the Editor

Between mega-cap stock performance and artificial intelligence’s rise during the narrowest-recorded market leadership, the beginning of summer is heating up in every sense – see what Michael Cembalest, Chairman of Market and Investment Strategy at J.P. Morgan Asset and Wealth Management, has to say about it all in this edition of Eye on the Market: Letters to the Editor.


Read the full article  here (PDF).




This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.

GENERAL RISKS & CONSIDERATIONSAny views, strategies or products discussed in this material may not be appropriate for all individuals and are subject to risks. Investors may get back less than they invested, and past performance is not a reliable indicator of future results. Asset allocation/diversification does not guarantee a profit or protect against loss. Nothing in this material should be relied upon in isolation for the purpose of making an investment decision. You are urged to consider carefully whether the services, products, asset classes (e.g. equities, fixed income, alternative investments, commodities, etc.) or strategies discussed are suitable to your needs. You must also consider the objectives, risks, charges, and expenses associated with an investment service, product or strategy prior to making an investment decision. For this and more complete information, including discussion of your goals/situation, contact your J.P. Morgan representative.

NON-RELIANCECertain information contained in this material is believed to be reliable; however, JPM does not represent or warrant its accuracy, reliability or completeness, or accept any liability for any loss or damage (whether direct or indirect) arising out of the use of all or any part of this material. No representation or warranty should be made with regard to any computations, graphs, tables, diagrams or commentary in this material, which are provided for illustration/reference purposes only. The views, opinions, estimates and strategies expressed in this material constitute our judgment based on current market conditions and are subject to change without notice. JPM assumes no duty to update any information in this material in the event that such information changes. Views, opinions, estimates and strategies expressed herein may differ from those expressed by other areas of JPM, views expressed for other purposes or in other contexts, and this material should not be regarded as a research report. Any projected results and risks are based solely on hypothetical examples cited, and actual results and risks will vary depending on specific circumstances. Forward-looking statements should not be considered as guarantees or predictions of future events.

Nothing in this document shall be construed as giving rise to any duty of care owed to, or advisory relationship with, you or any third party. Nothing in this document shall be regarded as an offer, solicitation, recommendation or advice (whether financial, accounting, legal, tax or other) given by J.P. Morgan and/or its officers or employees, irrespective of whether or not such communication was given at your request. J.P. Morgan and its affiliates and employees do not provide tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any financial transactions.

Legal Entity and Regulatory Information.

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment adviser, member FINRA and SIPC. Insurance products are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

Bank deposit accounts and related services, such as checking, savings and bank lending, are offered by JPMorgan Chase Bank, N.A. Member FDIC.

This document may provide information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (“JPMS”). The agreements entered into with JPMS, and corresponding disclosures provided with respect to the different products and services provided by JPMS (including our Form ADV disclosure brochure, if and when applicable), contain important information about the capacity in which we will be acting. You should read them all carefully. We encourage clients to speak to their JPMS representative regarding the nature of the products and services and to ask any questions they may have about the difference between brokerage and investment advisory services, including the obligation to disclose conflicts of interests and to act in the best interests of our clients.

J.P. Morgan may hold a position for itself or our other clients which may not be consistent with the information, opinions, estimates, investment strategies or views expressed in this document.  JPMorgan Chase & Co. or its affiliates may hold a position or act as market maker in the financial instruments of any issuer discussed herein or act as an underwriter, placement agent, advisor or lender to such issuer.

Aug 31, 2023

My global coding career in Bournemouth

Lorem Ipsum is simply dummy text of the printing and typesetting industry. Lorem Ipsum has been the industry’s standard dummy text ever since the 1500s, when an unknown printer took a galley of type and scrambled it to make a type specimen book. It has survived not only five centuries, but also the leap into electronic typesetting, remaining essentially unchanged. It was popularised in the 1960s with the release of Letraset sheets containing Lorem Ipsum passages, and more recently with desktop publishing software like Aldus PageMaker including versions of Lorem Ipsum.