The appreciation for sound integrated financial advice, wealth, and legacy planning has been a common discipline that has helped many high-net-worth individuals to build and retain their wealth throughout their life.
Wealth accumulation often manifests over time as part of a diverse and long-term strategy to increase your net worth. Although there is an influx of strategies to grow wealth through all life stages and seasons, there isn’t a one size fits all approach as each individual or family is unique. With this said, it is important to understand the principles that govern wealth generation and apply them to your own unique strategy.
Below are some of the guiding principles for growing wealth, which constitute mastering the art of managing your money and assets to increase wealth:
- Get the right integrated advice from an expert – as a starting point, seek advice from your private advisor who will be able to assess your current financial position and guide you on your wealth creation journey.
- Know where your money goes and don’t take on unnecessary debt – The first step to building a secure financial future begins with creating a budget that allows you to save money and pay off any debts you have. It’s important to be realistic when creating a budget and to make sure that it is something that can be followed. Tracking your spending will give you a better idea, especially if your expenses and income fluctuate. When you take on debt to fund your expenses, you pay interest — the opposite of what you need to do for long-term financial security, which is to earn interest.
- Consider diversifying your income – Passive income streams can come from investing in mutual funds or real estate, selling products online, publishing online courses, or other side hustles in which the earner doesn’t have to actively participate. The goal of creating multiple income streams should be to maximise your potential to build and retain wealth for you and your family.
- Learn to leverage your assets – this involves strategically using good debt, assets and money at your disposal to reach your wealth aspirations. For example, borrowing against an existing asset could unlock funds that can be used to purchase other assets and broaden your income generating opportunities.
- Protect your credit record for long term wealth creation – A good credit score is not something we think about often, until we apply for credit. Your credit score and other factors affect whether you will get approved for credit, how much you can borrow and, most importantly, how low or high your interest rate will be. This is a very important factor for your wealth building and retention journey.
- Diversify your investments – as the adage goes ‘do not put all your eggs in one basket’. This investment principle has ‘stood the test of time’ as part of a broader wealth creation strategy.
- Protect your wealth – as your earnings grow and net worth increases, so should your insurance and estate planning prospects. Ensure that you consider covering yourself with disability insurance, home, and car insurance, and an umbrella policy for anything else. This also includes having ample emergency savings, so that you can weather any financial storm or pandemics that dent your income stream, as well as back-up sources of income to alleviate any variations in earnings.
- Ensure that your retirement and estate planning is in check – Retirement and estate planning is a crucial part of your financial affairs to ensure that your family retains your wealth. A Will or an estate plan, is a detailed plan of how you will leave your accumulated wealth and belongings, big or small, to your loved ones once you pass on. Reviewing your Will, maintaining an up-to-date inventory of your assets and making sure important documents are kept safe is an important part of your estate planning.
How we think about and act with our money dictates a large part of our financial outcomes. The importance of wealth planning cannot be overlooked. A dedicated team of specialists lies at the heart of every wealth management strategy. These are professionals who will go the extra mile to understand your objectives and needs, ensuring that your wealth works for you and your family. They offer a range of integrated financial services solutions with platform-based assisted and unassisted services to cater for digital and face-to-face interactions that you will need throughout your wealth journey from preserving wealth, investments as well as retirement and estate planning, amongst other services.
Protecting and growing wealth requires a solid wealth plan and sound advice.
Pravesh Sunker is CEO of FNB Private Wealth.
