Financial Planning

What are the three mantras for wealth management?

wealth management

Wealth management is an area of financial planning that focuses on accumulating the wealth of an individual in different ways. When we talk about wealth management, most people think about millionaires and billionaires who make zillions every year. But do you know every individual should think about wealth management to make a more financially stable future for himself/herself and for their loved ones?

No matter if you are running a business, a self-employed professional, or an employee in a company with a decent salary, you should still plan for wealth management. If you learn the following three rules of wealth management, you can achieve your financial goals more easily.

The three rules or mantras of wealth management are:

  • Make
  • Save
  • Invest

#1 Make Money

Making money is the most fundamental aspect of wealth management. Unless you have a source of income, you cannot save money for yourself and your loved ones. This step is pretty obvious but is very important for those who are just starting out. Usually, people think that joining a company is a good way to make money. But this is the only one source of income, which may not enough for wealth accumulation or financial freedom.

In today’s time, when the costs of healthcare, household items, and housing are rising significantly, it is a must that you have more than one source of income so that you are not wholly dependent on one source. Find ways to make passive income – an income that is not earned but acquired automatically with minimum labor to earn or maintain.

Popular examples of passive income include the income you earn from renting your property, blogging, book royalties, social media sponsorships, selling templates, online course creation, etc.

Stock dividends and similar income sources also come under passive income but you will be able to invest and make money this way only when you have saved some.

#2 Save Money

The second rule of wealth management is saving money. This step seems quite easy when you have a good income. But did you know even though UAE residents benefit from very low or no taxes, many have no savings?

According to experts, the top reasons why millennials have little to no savings in Dubai are:

  • Easy to access no-cost credit cards
  • Buy Now Pay Later (BNPL) shopping model
  • Lack of financial literacy in average households
  • Non-essential spending
  • The peer pressure of living up to Dubai standards when they have low salary

You can make things easier and get advice on how to save your money in your particular circumstances with the help of a financial advisor.

Here are a few tips to follow when you plan to save money:

  • Track all your expenses both minor and major every month
  • Segregate your needs from wants. In the list of your needs, also add health insurance, auto insurance if you have a car, and life insurance if you have dependents.
  • Set your savings goal after getting a reasonable idea of how much money you can put aside every month.
  • Make sure you put your savings on automatic mode because most people fail to save if there is no automatic deduction for savings amount.

In case your income is too less that you cannot save, you need to look for ways to increase your income.

#3 Invest Money

When you save enough for your emergencies and put some more money aside, the next step is to invest your money so that it can grow and you can accumulate wealth. Make sure before you make any investment or get ready to invest in stocks, bonds, and other financial items, you have at least six to twelve months’ worth of expenses in a liquid account such as a bank savings account.

Investments for wealth management can vary in terms of risk and potential return. The general rule of thumb is that the safer an investment option is, the lower its potential return will be, and vice-versa.

This is the stage when you consider:

While a wide range of investment options is available, the most common and popular investments include stocks, bonds, and mutual funds.

To learn more about wealth management and how you can build up wealth for yourself and your family, please get in touch with our financial advisors and experts at New Age Insurance Brokers, LLC. You can call us at +971 4 3573378 or write to us at info@newageib.com.