Financial independence is something that everyone wants. To effectively build wealth, it’s necessary to make the best investments, leverage good opportunities, and practice healthy wealth management. 

Any experienced investors or financial advisers will be the first to tell you about the importance of not just diversification but making sure that each aspect of your portfolio and financial assets are actually good. Consider these factors when building your wealth.

Short and Long-Term Objectives

You cannot have a proper portfolio without these objectives in mind. Not only does setting goals give you more motivation, but it also allows you to set performance indicators that can tell you where you’re at. Consider what you’re trying to achieve, and you’ll be able to choose specific investments geared towards that. 

Liquidity

You should always consider whether or not an investment will be easily accessed without hurting its market value. It’s not just a fail-safe measure, either. How liquid an asset is has a significant impact on its quality as an accessible investment.

Diversification

If you have all of your eggs in one basket, you’re risking your portfolio. Diversifying can considerably lower your risk and help manage volatility in your assets. On top of that, having variety in your portfolio can also help yield higher returns.

Risk Management

It’s all about striking the right balance to suit your needs. You can benefit greatly from a certain level of risk that has more significant returns. It’s more rewarding to take on such a risk, but it’s also important to be smart with your choices. Again, this is where diversification helps because it allows you to take on safer investments with lower yields and riskier channels that have higher returns. 

Returns on Investments

At the end of the day, you’ll want to know how efficient your investments are and how sustainable your portfolio is. It’s good form to have more money coming in than going out. This doesn’t just apply to general spending but also when analysing the quality of specific investments. 

Accessibility

If it’s too hard to access your investments, it may be best to rethink your structure. Factors that come into play here include your age and resources, so it’s best to consider what needs you’ll have in the next five years. Are you keener on lowering your taxes or making access simpler? What you’re looking for will determine the quality of this aspect. 

Wealth Protection

This should come as a given without even taking into account fraud prevention and the like. That’s another matter altogether since you’ll want to think about your superannuation and how you can protect your wealth from creditors in the event that you are no longer able to work. 

Transferability

If you have any beneficiaries or a legacy that you want to leave behind, you also need to think about how easy it will be for them to access your assets and accounts. The proper guidelines and records need to be laid out to ensure that things go where you want them to.

Get the Right Advice and Consider Your Unique Situation Today! 

There are so many factors that contribute to the process of wealth creation. These not only help you map out the future but figure out what adjustments need to be made right away. So, whether you are an experienced investor or just starting, it’s crucial to stay on top of these if you want to have a sustainable system in place.

Get the right advice for wealth creation in Newcastle, Erina, Sydney CBD, Port Macquarie and Byron Bay. The Coastal Advice Group caters to every life stage, from bright young professionals to elderly individuals seeking a better way to manage their accumulated wealth. Contact us to make the most of your assets.

 

DISCLAIMER: The views expressed in this publication are solely those of the author; they are not reflective or indicative of RI Advice Group’s position and are not to be attributed to RI Advice Group. They cannot be reproduced in any form without the express written consent of the author. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice. Newcastle Financial Planning Group, Central Coast Financial Planning Group, Coastal Advice Port Macquarie, Coastal Advice Ballina Byron and Sydney Wealth Advisers are subsidiaries of Coastal Advice Group which is a Corporate Authorised Representative of RI Advice Group Pty Ltd, ABN 23 001 774 125 AFSL 238429.