Wealth management is something that makes sure that individuals keep a track of what they spend and what they save. It helps us on how we can manage our savings in order to grow them and seek the power of compounding.
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While money is considered as one of the most significant financial asset, there is something more compelling. We all maintain a balance between what we spend and what we save. In recent times, there has been an increase in investing habits amongst people, and individuals tend to invest more despite market volatility. It is crucial to manage even the smallest amount of savings and focus on growing the same.
Traditionally, with limited sources of income and options to invest/ save, we had very finite options. The emerging digital era and technological advances have made it possible to invest in various available options and diversify portfolio as per an individual’s needs, financial goals and risk appetite.
Here are a few ways that can help people manage wealth efficiently:-
Assessing the risk tolerance
It is crucial that we should focus on our risk appetite and then take the investment decision. Early investors have a higher risk appetite and hence can invest more in equity. The focus on the different options available is the second step once you understand your capacity to take the risk. Higher the risk, higher is the yield.
Balancing the investment portfolio
As rightly said, “Never put all eggs in one basket”, we should diversify our portfolio depending on the needs and goals. Careful consideration of all available options should be done before taking any decision.
Stay clear of financial goals
Blurred image of your financial goals won’t help you outline the best wealth management decision. Having a long term horizon helps take proper decision and go a long way in supporting financial goals.
Early investment is the key
If your goal is to manage your wealth then time is your best friend. The earlier you start, higher is your risk appetite and thus higher are the returns. The more time you give your investments to grow, the larger is your wealth under management. One might have fear and anxiety during early years but proper planning and research help take thoughtful decision.
Keep a regular check on investments
Today, investments may be actively or passively managed, depending on an individuals need and time framework. People who manage passively, should keep a track of their financials, at least once in every quarter and adjust their portfolio depending on current economic scenario.
Emergency fund
One should always manage an emergency fund in extremely unforeseen events. While planning does help to manage wealth, there could be certain events which are totally unpredictable. Managing an emergency fund help overcome these emergencies. People should never take emotional decisions while managing wealth.
Retirement corpus
Having a long term horizon really helps. People should keep an eye on maintaining a corpus for retirement. Once people have their goals cleared in mind, the adjusted time value of money can help people build a huge corpus for retirement.
Keeping a proper vision of your requirements along with a clarity on financial goals can go a long way in helping manage wealth. If you have an investment professional, he or she should only recommend investments that are suitable for you. The best investment professional is one who fully understands your objectives and matches investment recommendations to your goals.
The author, Saurav Basu, is Head – Wealth Management at Tata Capital. The views expressed are personal
(Edited by : Anshul)
First Published: Nov 23, 2021 3:29 PM IST
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