Wealth Accumulation
Most people when we talk or discuss about this topic will always think about returns. This then leads to people not having a proper asset allocation and / or diversified investment portfolio which leads to either
1. Too much concentration into one asset class that gives them the highest RoI but opens them to market shocks if the asset class isn’t doing well.
2. Open to scams, as these always highlights the RoI you get which is generally higher than your regulated investment products.
The other part of Wealth Accumulation that people usually forget, is the actual savings that you can allocate to your Wealth Accumulation goals.
Why is this?
1. Most people don’t have the believe that they can increase the amount that they are saving regularly.
2. Most financial intermediaries don’t focus on needs based analysis to check potential improvements in their client’s cashflow because they do not need to, or too lazy to do, or no tools to use or clients not interested to provide the information.
So why is this part more important than the return part for Wealth Accumulation?
1. The amount of risk that you need to take goes down the more you can save. The less risk you take reduces potential to losses.
2. The more that you can save increase your ability to diversify, which in turns reduces the risk you face when investing.
3. Having more resources allocated means you can also weather any market downturns better compared to the rest.
So when you are looking to review your investment portfolio, don’t stop only at your rate of returns. See whether there are potential ways for you to increase the amount that can be saved / created.
Or failing which, find your nearest licensed financial planner to assist you with your review and your financial plan.