4 Things That Keep You Poor

Now taxes do hamper wealth building.But I can’t say I’d go so far as to evade them.The risk is just too high, not just to wealth building, but also to one’s reputation.Tax avoidance with a bit of planning is good so long as the hassles and expenses of hiring the required tax professionals doesn’t make the proposition unattractive.

Unproductive/consumer debt is bad.The interest burden eats into a person’s ability to build wealth.Also the goods and services purchased by these debts are not likely to produce any income.In fact the ‘assets’ purchased might not even have much resale value.Worse they might even entail other expenses to use or maintain them.

The general belief is that inflation is an invisible tax and impoverishes all alike.However,the truth is not so simple.Inflation affects different people differently.Here’s an older post of mine on how to use inflation to grow one’s wealth  http://wealthymatters.com/2011/04/07/using-inflation-to-create-wealth/

All structured financial products,where management fees eat into the returns ,hamper wealth building,especially if a person could be doing better by themselves with some plain vanilla investment with no management fees.However as the real effect of compound interest only kicks in pretty late,it is in the case of very long term investments like retirement plans that the effects of  poor or under performance can be stark.Currently,I can’t say I’m am very happy with my NPS account. I not convinced it is going to be all that much use in retirement. All the talk of the good results coming in the later years seems like a pipe dream.Meanwhile,the management expenses are regular as clockwork and my invested capital is eroding,switching entails more expense and anyways there is not much to choose between the different managers.To make matters worse my money can’t be withdrawn till retirement,never mind that there may be nothing to withdraw.