Preserving Wealth is Very Different than Creating it
Views • 7th Oct, 21
Life is not predictable, nor is it fair. However, there are habits of diligence, careful planning and controlled decisions that create a sense of security for individuals and groups.
Wealth does not appear from wishful thinking, but through taking action that is consistent and clever.
In this blog post, we will be looking at two aspects of wealth:
- Creating it and,
- Preserving it
1. What is Wealth?
According to investopedia, wealth measures the value of all the assets of worth owned by a person, community, company or country, minus existing liabilities.
This is also known as equity. Accumulation of wealth needs to be consistent otherwise, the aforementioned liabilities that people have can bog down any progress that was made.
This type of habit demands character and fortunately, character can also be built.
2. How do we Create Wealth?
The goal to create wealth is a serious step to take and can pay off handsomely if executed intelligenty, or it can be a nightmare if done without care and caution
There is some advice that all can take into consideration, but as with all things, they must be tempered with practicality.
- Look for a steady source of income. Attend to your obligations, pay off your debts and whatever is the residue will be the money you will deposit into your wealth accumulation project.
- Choose a suitable method of creating wealth that goes along with your goals and personality. This can either be a savings account where you can accumulate 3 to 6 months of salary that is available in case of an emergency. Or/and an investment portfolio with the help of a financial advisor looking at funds, ETFs or stocks.
3. How do we preserve our wealth?
The courage to say no to spending sprees is really the most important factor to any wealth preservation strategy.
This is not depriving yourself of your own money but rather looking forward to using it in retirement or in times of emergency. Once you have your head in the game you can consider the following options:
A) For investors, always be aware of your Risk Capacity, whihc is your financial ability to take on risk and the risk required to achieve your financial goals.
B) For savers, live within or below your means to avoid the temptation of using funds in your savings account for extra purchases.
C) For those with children, teach them your good habits and let them know the hard lessons you faced so that they too can learn the ways of creating and preserving wealth.
Good habits build up overtime and they never let you down.
4. Which is more important, Creation or Preservation?
There is a symbiotic relationship between the two. You cannot preserve wealth if you do not create it and you cannot create wealth if you did not preserve the funds to begin with.
Whichever side of the spectrum you find yourself on, is irrelevant. What matters is that you are shaping your future in a financially healthy way.
So, what are you waiting for? Book an appointment using the link below and take the first steps in achieving your financial goals if that be creating or preserving.