Discover 5 Wealth-Generating Techniques your Wealth Management Strategies Advisor may or may not Reveal to you

Would you love to discover the top 5 wealth-generating techniques your wealth management strategies advisor may or may not reveal? Well, we have got you completely covered on this!

Introduction

Balancing between your 9-5 job and managing finances can be a tightrope-walking scenario for most of us. To save enough money for a fulfilling or promising future can still seem a task.

This is typically because most of you spend your salary towards paying rent for your home, buying groceries and funding the tuition fee to help your sons or daughters study. No wonder do you run out of cash to wait for your next monthly pay cheque. 

Even in developed economies like US or Europe, this seems to be a familiar situtation in most working-class households. 

Building a wealth basket not only helps you achieve your immediate financial needs but also gives you the freedom to lead the rest of your life the way you want it to be. 

On this note, let us discuss the top 5 wealth building techniques that even your wealth management strategies advisor may or may not brief you about. Helping you get started here:

What is wealth management- Meaning and conceptualization explained

Wealth management is a comprehensive process by which an experienced wealth manager or a highly qualified investment banker sits hand-in hand with the client to discuss what types of profitable financial instruments one can choose to form a diversified wealth basket. 

It can be stocks, shares, mutual funds or even etfs you can choose. The wealth manager discusses the pros and cons of various investment products so that you can pick the right kind of investments and put them into your wealth basket. 

You can get steady rate of returns from the investment. And, because you have taken efforts to build your wealth basket in a sustainable way, the basket also fetches you a diversified form of an income earning portfolio wherein the loss of one product is offset or compensated by the gains another investment product makes. 

This way, you make sure that your wealth basket remains intact even in adverse market conditions and helps you grow your wealth at an even or steady pace. 

What are the top 5 wealth generation strategies that even you wealth management strategies advisor may not have briefed you about?

You are now entering the main-stream core of the topic that stays under discussion. These are the top 5 wealth-generation strategies that your financial advisor or wealth manager may or may not have briefed you about. 

Let us get a run-down into what these exclusive strategies are:

1. Start with smaller savings

You can start investing using smaller savings. Your first-time investment need not mean signing a blank cheque for one million US Dollars. Even the rich people don’t do that.

In fact, humble beginnings can garner greater results for you. You can start with as low as 1000 dollars a month. And, by the end of the year, your wealth basket stands at $10,000. Doesn’t that feel good? 

And, the best part is that your interest will keep compounding. You can imagine the hefty pay check you would have by the end of 30 years. Think about it!

2. Risk assessment

You must consider investment options that are low-risk in nature. This way, you may not want heavier returns on your investment as against losing all of your capital investment at once. 

Therefore, when you sit with your financial advisor for your very first appointment, you must know what kind of risks each investment plan carries within its whim. 

Most of investment plans come with market risks, liquidity risks and credit risks to name a few. Let us have insights into what each type of risk can mean to investors as such:

2.1 Market Risks

Equities like shares, stocks, commodities, futures and even currencies are subject to market fluctuations. Their prices can rise or fall owing to the volatility of the market.

Say for instance, when the global recession was aoounced at the Wall Street in the US, S&P stocks plummeted to less than 30%. This meant investors lost a huge chunk of capital investment on account of the same.

The individual sums can be so huge that it can mean lifetime worth of savings for retirees or pensioners. Therefore, you must analyze market risks before venturing into any kind of investment plan. 

2.2 Credit risk

Credit risk refers to the risk of the product issuing firm signing up for bankruptcy. In this case, investors may lose a partial or entire sum of their investment in terms of their principal amount.

Therefore, as a well-informed investor, you must gauge the credibility of a product issuing firm before you venture into signing up for an investment plan with them. 

2.3 Liquidity risk

As an investor, you may be in an immediate need for dire funds. It can be a medical emergency or you may face unanticipated losses at your business unit. Either ways, you may need for an urgent requirement of funds to offset unexpected financial scenarios.

Sometimes, when you try selling your investment portfolio in terms of shares or stocks, you may not be able to fetch your entire price at the market place.

Owing to volatile market scenarios, the buyers may not offer you the prices you want. This is a risk that is faced with liquidity issues. 

In a nutshell, you must access the different types of risk factors that are associated with investment products before you try signing in on the dotted lines.

3. Understanding how cash flow principles work

Understanding cash flow or doing a cash-flow analysis is an imperative step you must havve in mind while you are aiming to build a robust wealth management portfolio for yourself. 

This means, no matter what situation you contemplate, you must dispense a part of your dispensable funds towards the investment portfolio. 

You can create cheat-sheets wherein you draw up the sources of income you get your money from. Make a separate column for the incomes you receive. Then create another template wherein you maintain columns citing what expenditures you are more likely to incur during the month.

This way, you pre-plan your income-expendire cash flow statement beforehand. You can then plan the extent of cash reserve you can allocate towards your investment goals. This should be a disciplined process and you must make sure that you do not break this chain. 

4. Leveraging your loans and assets in an effective manner

You must leverage your assets and loan components in an effective and streamlined manner. When you know what is the cash dispensables you have and take a loan component to cover the remaining portion of a lumpsum, you may get lucrative interest rate options to cover the value of a loan.

Let us look at this using a simple illustration here:

Suppose you have been wanting to buy a Rolls Royce car for $10,000, try setting up a saving fund in the name of ‘Dream Car’. You can save for two to three years to gain at least 60% of the car amount, say $6000 in this case.

When you then opt a loan for just $4000, your interest rate component may not be on the heavier side. You can take a loan offer at 7% pa. Still that just works out to 7% on $4000 which is $280. 

This interest is way affordable as against paying $1000 every month when you take a brand new car loan for the entire sum covering $10,000.

Therefore, when you leverage your assets vis-a-vis your loans, things get easier on your wallet plus you achieve your dream goal of owning your brand new car.

5. Creation of a diversified investment portfolio

As the proverbial saying goes like this: ‘Do not put all your eggs into one basket’

This is a hard core rule that mainly applies to investments and finances too. 

Say for instance, when you invest your money only in equities, market crashes or adverse volatile market conditions can eat up your capital investment in no time.

On the other hand, when you invest your money into different types of investment products, the loss of one product may be offset or compensated with the gains of the other.

So, you must have a customized or diversified wealth basket comprising fixed-interest annuities, shares, exchange-traded-funds or etfs and real estate bonds. 

This way, you maintain a well-balanced and a diversified wealth basket that can generate bounty income for decades to come.

Suggested Reads: how can a wealth management firm benefit you

The Bottom Line

You must sit with an investment manager or take solited advice from authorities that command expertise with respect to investment-related products.

This way, as a newbie investor, you would be putting your right foot forward as against aimlessly browsing millions of investment-related websites that throw numerous options for you to choose from.

You can connect with a financial advisor or a wealth management expert via a face-to-face interview or via a virtual meet online. This way, you get the right kind of cues to build your wealth baskets in an effective manner indeed!

Frequently Asked Questions or FAQs