Wealth management strategies [abstract]

ABSTRACT

Many of us expect to live longer, but find it hard to make the first step to find our retirement. One reason many people put off buliding their wealth temple is that they often lack direction or guidance. Simply put, we need a plan to act on. The four financial pillars which support our wealth temple are short-term savings, wealth accumulation, asset protection and income protection. No matter where we are in our life cycle and what our financial goals are at that juncture, we can best achieve them once we determine our personal and family goals and make plans to attain those goals with help from a financial adviser, and the appropriate investment tool or strategy that the financial adviser believes is best suited for us and our family. The younger we are, the more we should focus on buliding an investment strategy to save and accumulate assets for the future. A budget is needed in every life cycle, but more so in early adulthood. During the career development life cycle, or in our twenties and thirties, earnings are low and need to be channelled to make costly expenditures for a first home and to start a new family. At age 40 to 50 years, we enter the mid-life cycle. In this period, our earnings rise significantly, however, we must provide for children's college needs and life after work. Simultaneously, with larger salaries comes hugh spending on a second home or perhaps a vacation home, a boat, and the desire to start and build a business. While asset growth is still a key objective, we must shift gears to focus on asset preservation. In the golden years of the sixties to seventies, we stand at the door of retirement. Our financial cycle now advances to preservation and liquidation. A retiree's dream is to have a life similar to that enjoyed while working, with a vacation or two, and adequately tending to the necessary medical costs when they arise. Today, as biotechnology reforms healthcare, we will live longer and spend more than 20 years in retirement. If we plan to live longer, we will have an active lifestyle, so we need to establish a regular investment programme for the long-term. So, how can an investment programme support a vibrant lifestyle? Investing is a question of risk versus return. Since 1926, equities have been the best performing asset class. There appears no reason why investments in stocks should not continue to outperform real estate, fixed income, annuities, money markets or any other investment strategy. (AU)