Think Tank

Wealth creation is a buzzword that’s doing the rounds as incomes are on the rise. Every other investor is somehow conditioned to believe that it's easy to create wealth. The most popular notions are those of buying stocks, or starting up a business enterprise, or some even try their luck at the lottery! Ask any financial advisor and he’ll steer you far away from these ideas. Anyone worth his wealth, anywhere in the world, will tell you that getting rich and sustaining that takes an informed, sensible and sane investing approach. One way to do it is to take inspiration from the leading business tycoons - there’s one thing in common; they’ve built wealth and they’ve built it in the long run. They’ve put in tremendous hard work, meticulous planning and carried out impeccable execution. Moreover, their investors have had faith in them and their ideas.

Today, with a booming economy, rising stock prices and an increase in salaries and spending power, individuals are on the lookout to create wealth by investing in enterprises, real assets like land and building, commodities and many other avenues.

There are different kinds of investment approaches. Some believe in investing the surplus of their enterprise in the business itself, and sharing it with the shareholders. Many want to give back to society and thus allocate a portion of their earnings towards a cause, either through a trust or an entity. In this case, the money needs to be managed effectively in order to generate better returns, which eventually get spent for a noble cause.

While the avenues are many, for most individuals focusing on their business or profession is key. Therefore, there is a necessity to differentiate between personal and enterprise wealth. That’s where wealth management plays a significant role. It enables you to determine what's really important to you, then develops actionable strategies to help you realize your most cherished hopes and defends against the things that might undo them. It helps you plan deliberately so that your wealth works to bring you a lifestyle well earned.

Hence, as personal wealth gets segregated, the need for professional wealth management is felt strongly by investors. Usually, the most neglected part in any individual’s repertoire is their personal wealth. The pressures of business and the commitment to one’s wealth takes away most of their time and adding to that the complexities in managing monies are increasing by the day.

Wealth management is a holistic approach to understanding and providing solutions for all of the major financial challenges of an investor. Any investment, be it mutual funds, direct stocks, commodities, or even art, requires professional expertise to understand its nuances and complexities. This requires time, inclination and adequate information. Professional wealth management ensures all of these three aspects. Each investment class and/or product has within its fold a multitude of financial products and opportunities and unless the necessary due diligence done, the investment results are likely to be unfavourable.

To put things in perspective, wealth management and financial consulting comprises the following aspects. It understands in depth one’s risk profile, enables decision-making as regards asset allocation while evaluating the various opportunities and products asset-class wise. It facilitates the construction of a portfolio, draws up conclusive investment timing and periodically tracks and reviews the performance. Today, the role of wealth management is both widespread and vital to your financial life.

 

Disclaimer: The views expressed in the articles are personal of the authors and do not reflect the views of Kotak Mahindra Bank Ltd.