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Introduction
Recently, there’s been a lot of talk about how much the Ambanis spent on their son’s wedding. But what’s really interesting is how they’ve built their fortune. Ever wonder how they’ve grown their wealth so successfully? It’s not just about having money—it’s about using smart strategies.
In this article, I’ll share five key tips that the Ambanis and other wealthy people use to save on taxes and build long-term wealth. These tips can help us all manage our money better and break free from the usual cycle of earning, spending, and barely saving.
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Tip 1: Have a Family Business or Professional Role
Wealthy families often have at least one person involved in a business or profession. Even if both partners have jobs, starting a small business or freelancing can be a great idea. It doesn’t need to be a big company—it could be something like website development, offering local services, or consulting.
Why is this important? Businesses offer more tax benefits than regular jobs. You can deduct many expenses and lower your taxes, which is a tactic the Ambanis use. So, even if you have a job, think about starting a side business in the future to increase your cash flow and cut down on taxes.
Tip 2: Buy Assets in the Business Name
Another trick wealthy people use is buying assets, like houses or cars, in their business name. This lets them claim tax deductions on these purchases.
For example, if you work from home, you can charge “notional rent” to your business, even if you’re not actually paying rent. This gives you a tax deduction. You can also deduct things like repairs, maintenance, and even depreciation on your house.
The same goes for cars. If you buy a car for business purposes, you can deduct fuel, repairs, and even interest on the car loan. This means your business covers these costs, while your salary can go into savings or investments, helping you build wealth faster.
Tip 3: Use Loans to Invest
Many people think taking loans is bad, but the wealthy see it as an opportunity.
Here’s how it works: if you take a loan at 8% interest and invest in something that gives a 12-15% return, you’re making money on the difference. Taking a long-term loan, like a mortgage, allows you to spread out payments over time. This keeps your cash flow steady and lets you invest your savings in the stock market or other areas with higher returns.
The key is to make sure your investments give better returns than your loan’s interest rate. If they do, loans become a smart way to build wealth.
Just be cautious with high-interest business loans unless you’re confident your business can generate high returns.
Tip 4: Avoid Investing in Land and Gold
This might surprise you, but the Ambanis don’t invest much in land or gold. Why? Because these assets, while considered safe, don’t give the best returns over time.
Many middle-class families invest in land or gold, thinking it’s a smart move. But land usually offers low returns unless the area develops significantly. It’s also not easy to sell quickly when you need money, and legal issues can make it risky.
Gold, especially jewelry, is also not a great investment because of high making charges and low resale value. While gold can protect your wealth, it doesn’t help grow it. If you want to build wealth, it’s better to invest in areas with higher returns.
Tip 5: Don’t Trade—Invest for the Long Term
There’s a myth that trading stocks is a fast way to get rich. In reality, it’s more likely to make you lose money.
The wealthiest people make their money by investing for the long term, not by trading stocks. Trading is risky and short-term, and many people lose money trying to make quick gains.
If someone tells you they’re making big money from trading, ask them:
- Have they been consistently profitable for the last three years?
- Have they beaten the returns of the stock market?
- Can they show proof, like tax returns?
Most won’t be able to answer these questions because trading isn’t a reliable way to build wealth. The Ambanis invest for the long term—they don’t rely on trading to grow their fortune.
Bonus Tip: Invest in Relationships, Not Just Money
Here’s one final tip: invest in relationships.
Money can open doors, but relationships can open even more. The Ambanis are experts at this—they’ve built strong connections across business and politics, ensuring their success no matter what.
While we don’t need to connect with politicians, it’s important to focus on building good relationships in our personal and professional lives. These connections can provide opportunities and support that money alone can’t buy. So, while investing in finances, don’t forget to invest in people too.
Conclusion
These five tips, along with the bonus tip, can help you rethink your financial future. They’ll help you save on taxes, grow your wealth, and lead a more financially secure life. By using these strategies, you can take control of your money and build a brighter future.