Money Woes? Get Street Smart About Managing Your Wealth

It’s always rather nice to have something that could be accurately called “wealth.” But are you actually managing your personal wealth effectively? So long as your net position is in the black, you’ve got assets to play with. But knowing how to navigate all its possible uses can be difficult.

Here we’re going to investigate some sound wealth management principles. Here’s how to get street smart about managing your wealth.

Start Retirement Planning Early

All the best financial advisors agree that people should start planning for retirement sooner rather than later. There’s an enormous difference in the amount of money you can build up if you start saving in your twenties, rather than your forties. Over a period of forty years, compound interest quickly adds up to some dizzying numbers. Say, for instance, you put away $1,000 at age 25. Most retirement savings earn around 4 percent per year, on average. So how much money do you think you’d be left with by the time you reached 65? It turns out that that humble $1,000 will grow to more than $4,800 after 40 years. Now imagine just how much money you could save if you saving $1,000 every year of your life. By the time you came to retire, you’d have a handsome sum to live on.

The bottom line? By starting retirement savings early, you can build a savings pot that will allow you to do the things you dream about.

Make Your Goals Achievable

Your goals inform the way you manage your money. For instance, if you want to live the high-life, then there’s no point just putting a few extra dollars into your 401 k. You need to take big risks if you want to get big rewards. For instance, one of your wealth management goals might be to set up your own company. This is a route to getting a big payoff. But it’s also a risky venture that may leave you broke.

If your ambitions are more modest, like owning a home, shift your financial plan accordingly. Don’t bother playing around with high-risk shares on the stock exchange. Invest through tried and tested means in companies that are sure to provide a return.

Play The Long Game

There are, in general, two distinct types of investors. There are those who play the long game, and there are those who want to make a quick buck. If you want to manage and build your wealth, it should come as no surprise that you should play the long game.

Just look at the returns that gold bugs saw back in the 2000s. Gold was down at a mere $300 an ounce around the year 2000. From 2000 to 2011, the price of gold shot up to more than $1,800. During that entire time, those who bought gold were told that it was a bear market, or that gold was in a bubble. And yet they continued to hold onto it nonetheless. The people who played the long game and ignored the vicissitudes of the market did better than those who didn’t. There’s an important lesson in that.