Wealth Management – The Path to Financial Independence

Wealth Management – The Path to Financial Independence

The increasing complexity of financial markets and products calls for investors to be savvier in the management of their finances. The path to financial independence dictates for careful planning and prudent financial decisions to be made though out one’s life time.

Start Early, Start Young

When it comes to investments and financial decisions, the only advantage you have on your side is time! The more time you spend in the market, the better – the earlier in your life you make prudent financial decisions, the better. Begin your path by investing in property in your 20s, so you have a lifetime to pay off your first property, and use it to acquire others. You must also get into the habit of saving & investing as soon as you start earning an income – don’t wait until you are earning enough, start now!

Invest in Different Things

We call it diversification in investments – wherein you spread your investments across different vehicles, and across different regions and sectors. Someone who has a well diversified investment portfolio has a little bit of their money in shares, some in property, some in bonds, some in unit trusts and just a little bit in cash. This person will look at their investment objectives – what they are really trying to achieve – and decide which investment to get into based on that. When investing, this person will be looking to both grow their investment and generate a stable income.

Keep An Eye On Debt, Live Within your Means

Bad financial decisions like being over-indebted, can take many hard years to get over. It takes discipline and a sharp focus on your future financial security, to avoid borrowing more than you can afford. Being realistic about one’s priorities is also a game changer in personal finance; don’t buy that fancy car until you have a roof over your head – don’t borrow money for consumption – pay your credit card off in full every month – all of this will save you years of unnecessary interest payments.

Life is Full of Risks, Mitigate Them

The very nature of life is such that it is uncertain. While tomorrow can never be a guarantee, one can always use insurance solutions to cushion the blows of some of life’s disheartening situations. When death and disability befall, there can be dire financial consequences; when the breadwinner in a family dies, lifestyles are often crippled – with kids having to be  taken out of decent schools, and families having to change neighborhoods. Life Insurance is a sure to protect a family’s livelihood beyond death. Mortgage Protection must also always be in place, to ensure that upon death, the balance remaining on the mortgage can be cleared off.

Leave a Lasting, Enduring Legacy

There is no point in making an effort to build any kind of financial security, if you are not going to protect your assets for your children and their children. Drafting a valid Will is one sure way of ensuring that your assets pass onto the right hands upon your death. A Will also eliminates the hassle of having your minor childrens’ inheritance being transferred to the Guardian’s Fund.

An Ally To Light Your Path

In order to navigate this complex world of personal finance, engaging a wealth planner can be useful. This is an independent professional who will be there to give you unbiased advice. They will and must consider you personal goals and aspirations, your financial circumstances, your income, assets and liabilities - before they give you any kind of investment advice.

Ms Setshwano Ngope is a though leader in personal financial management. She writes personal finance articles and runs seminars & workshops to improve the public’s financial literacy levels. Setshwano is currently the Head of Retail at BIFM Unit Trusts, and is passionate about promoting Batswana’s investment in financial instruments.

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