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Top 8 Wealth Management Tips

Wealth management isn’t just for the ultra wealthy, it’s for everyone. Here are our top 8 tips to help you get started.

31 Mar
2020
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DISCLAIMER: Please be advised that this article is not intended as investment, tax, financial or legal advice. Interested readers should seek out professional advice for their particular situation.

Wealth management and finances can be a touchy subject. Many people have some amount of anxiety surrounding money, especially when thinking about the future. But it doesn’t have to be that way. Managing your wealth is easier than you think, as long as you know what you are doing. 

Additionally, wealth management is not something for just the ultra wealthy. Anyone and everyone can benefit from wealth management. In this article, we’ve compiled our top ten tips for wealth management so you can make your money work for you, not the other way around. 

1. Diversify your assets

One of the most important parts of wealth management is ensuring that all of your eggs are not in one basket. It is highly recommended to spread your assets across stocks, bonds, real estate, etc. This way if one of your investments takes a downturn, the rest can still be profitable and you can avoid losing all of your hard earned money.

An additional level of diversification to look at is geographical diversification. By diversifying where your money is physically, you are reducing the risk of losing it. Consider the 2008 financial crisis as an example. All it took was for one bank to collapse and the US economy followed. In fact, most of the Western world was affected. 

At a time like this, having an offshore bank account in Singapore or Hong Kong meant that the crisis would have impacted you far less than the average US citizen. Clearly not all banks are created equal and a foreign bank account allows you to hedge against a collapsing local economy if need be. 

Diversifying your currency is equally important. Currencies are not stable and are typically volatile in times of economic or political turmoil (for example, the British Pound has struggled significantly after Brexit was announced in 2016). Once again, an offshore bank account can help to mitigate this risk.

2. Look into offshore options

When most people hear the phrase “offshore banking”, they think of the top one percent who spend their days yachting around private islands. However, when you look at the facts, not only is offshore banking incredibly accessible, it also has a large number of benefits. Offshore banking can help you make the most of your money. Additionally, the technology has developed so that you can even open your offshore account completely online.

Offshore banking can give you access to some of the best services available, better interest rates, economies that are more stable, and better taxation. Many offshore banks cater directly to people looking for offshore wealth management services. While these accounts may require that you invest more money than a typical savings account, the rewards can be very appealing.

3. Know your priorities

What do you want to achieve with your wealth? What are your long term and short term goals when it comes to your finances? It’s important to wrap your head around these questions before you begin investing and researching in earnest. Different goals will lead you down different paths; it all depends on what you want to achieve. In most cases, a financial advisor can help you get to where you want to be.

If you share your finances with a partner, make sure you have discussed what you each want to get out of your money, and identify any major questions or shared goals you have. If you have children or other dependents, don’t forget to take them into account too. This is especially important if a major financial decision like paying for college/university or placing an elderly parent in a care home is on the horizon.

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4. Shop around for the best services

Working with a financial advisor to manage your wealth can be extremely useful. It allows you to rest comfortably knowing that your money is in safe hands with someone who understands how the markets work. That being said, it can be worth your while to get a second or third opinion when it comes to financial advisors. 

Don’t hesitate to talk to a few wealth management advisors to get a better understanding of what they can offer you. While working with a financial advisor will cost money, their advice can be invaluable. However, when it comes to the cost of a financial advisor, cheaper isn’t always better. Do your homework and talk to other clients of a wealth management advisor so that you are able to get a better understanding of what working with them is like. If you feel the value is worth the price, then go for it.

It’s also important to shop around when it comes to fees. For investments, the fees you pay in your funds (also called expense ratios) can really eat away at your money. Even fees as low as 1% will cost you in the long run. You may find that your current bank or financial advisor doesn’t offer the lowest fee structure. Look into other options (once again, offshore wealth management can be a great option here).

5. Automate your investments

If you’re working with a financial advisor, this should be happening automatically. If you’re not, ensure that you are investing regularly and consistently. You need to invest regularly to grow your wealth, and here using an app or some other type of digital financial service might be useful. Once you automate your investments, you can invest worry-free and do nothing except track your investment every few months.

6. Reassess on an annual basis

To make sure that your wealth is working for you, it’s important to look at your situation yearly (or more often if you like) to get a sense of the bigger picture. Additionally, your original priorities may have changed over the course of a year. For example, your children have finished college and now you’re starting to think more seriously about retirement. You’ll need to adapt your current wealth management plan to reflect that.

Once again, if you’re working with a financial advisor, these yearly meetings are par for the course. It gives you an idea of how everything is going, and your financial advisor can help you develop a plan if you need to change direction. While it’s great to look at how your wealth is doing on a weekly or monthly basis, looking at the year as a whole gives you a better idea of what is working and what, if anything, is not.

7. Avoid taking on more debt

If you don’t have cash in hand to buy something, don’t put it on your credit card. While over 60% of adults in the United States have a mortgage, that is perfectly fine; what we’re talking about here is consumer debt. Debt is the antithesis of wealth, and consumer debt can be hard to get out of if you’re in the habit of spending more than you earn and it isn’t conducive to long term goals like retirement.

A good rule of thumb is that if you aren’t able to buy something outright, don’t put it on your credit card. If you’re really keen on buying a boat or a new car, save up for it rather than going into debt. It might take a little longer, but you’ll be glad you did in the future.

8. Do your own research

As with all things financial, it’s important that you understand the basics of wealth management. While you can go into the process blind, especially if you are working with a financial advisor as they do the majority of the work for you, continued ignorance is a good way to potentially lose money. It’s perfectly fine to ask questions and expanding your knowledge is definitely encouraged. Not only do you learn more, but you also have a better understanding of what is important when it comes to wealth management.

Conclusion – Top Wealth Management Tips

While the financial market is currently experiencing a downturn thanks to COVID-19, now is not the time to panic. Financial experts recommend that you keep contributing to your investments, retirement funds, and savings as usual. Remember, wealth management is a long term strategy. Things may be down now, but there is no telling where they will be five years from now and it is impossible to predict what the market might do.

Managing your wealth is not hard, but it does require that you do your homework so that you can make smart decisions. Having a basic understanding of investments, diversification, and more can really go a long way. We hope that these tips have inspired you to begin your own wealth management journey.

DISCLAIMER: Please be advised that this article is not intended as investment, tax, financial or legal advice. Interested readers should seek out professional advice for their particular situation.