Building wealth takes time, discipline and requires a long-term view.
Building, protecting, and growing wealth requires a comprehensive plan structured around every investor’s personal goal and circumstances. It is a long-term process – a marathon not a sprint. These are the key components for success.
Time is money:
What does this really mean? Simply not taking charge of your personal finances could cost you great investment opportunities and capital growth. Not seeking professional financial advice on how to best invest your wealth might be detrimental to your long-term objectives. Take the time to get professional advice as time wasted cannot be replaced. The value of compound growth is realised over time, so the sooner you become invested in markets, the more powerful the effect of compound growth could be.
Devise your three savings strategies:
A general rule of thumb is that each investor should aim to have three savings strategies. These are short-term savings, medium-term savings, and long-term savings. Short-term savings should be easily accessible and can be used for emergencies, travel and leisure, or a deposit on a property or vehicle. Medium-term savings could consist of additional retirement savings, tertiary education for children, or home improvements in a few years. Long-term savings could be retirement funds or capital for your family to inherit one day. It is important that you plan your short-, medium-, and long-term savings strategies as early in life as possible, as time in financial markets is one of your biggest assets. Most importantly, save as much money as possible. When additional funds become available, save that too.
Be comfortable with what you are investing in:
There could be nothing more counterproductive than investing in an inappropriate solution. An example could be being invested in a fixed-term product for five years when you need to access the funds immediately. A wealth advisor should be able to make you understand what you are investing in and the details of the investment solution. Make sure that you understand all the ins and outs, including the tax implications, of where your wealth is being allocated, and that you are comfortable with it.
Estate Planning: The cherry on the top
A good financial plan should always be backed up by estate planning. You should have a valid will as soon as you own your first asset, and as early as opening your first bank account. Your will should be updated when personal circumstances change, additional assets are acquired or sold, addition or death of family members and beneficiaries just to name a few. Having a will in place will ensure that your estate is correctly planned and that asset distribution in terms of the will is seamlessly achieved.
Ensure that you regularly review your investment strategy and adjust it if circumstances change. Building wealth takes time, discipline and requires a long-term view.