How to attain your Wealth Goals

How to Attain Your Wealth Goals

If you’re reading this, chances are, the story below in a way describes your journey as well.

You went to school all bright eyed. At first, you didn’t understand the purpose of school and quietly thought it was a ploy by your parents to get rid of you for most of the day. As time went on, you began to make sense of the ties between a good performance and the ability to land a good job (or a career if you’re lucky). That was the ‘golden-ticket’as far as you were concerned. You buckled up and studied hard with the brightest vision of the possible future that good grades could create. However, with each stage of schooling, your vision/dream was re-adjusted to suit a given reality of circumstance. You made the transition to intern and you learnt afresh what the job market really requires.

It didn’t take long to discern the fact that most jobs keep people barely afloat.

So how does one generate wealth under such circumstances?

WORKING HARD

Don’t roll your eyes just yet. Stick around.

There really is no substitute for hard work. Hard work is a means to an end and not the end in itself. Hard work serves to equip you with everything you need to know in order to perform at industry standards (or at world-class standards if you push yourself). The late nights spent perfecting and perusing the myriad of specialised blogs or videos on your particular field are both valuable pieces of informal education. This is what gives you an edge over the rest and allows you to stand out. This makes you an easy candidate for promotion.

And now, thanks to the promotion, you’re making a bit more money. But it’s still somehow not enough because life’s responsibilities keep catching up to you.

The point of working so hard is to slowly save and accumulate as much as possible. The economists say ‘save 30-40%’ of your income. If by some miracle this is possible, then you seriously have to consider what you’re saving for.

Hence the next step.

WORKING SMART

Working smart is mostly vague but we’ll define it as ‘adding a bit of strategy to hard work’.

Once you’re stable at your place of work, and the enormous responsibilities now seem manageable, then you begin to think of a side project. This project is a combination of a passion and a skill that you’ve nurtured or harboured for a while but never really got the opportunity to pursue.

At this stage in a way, the journey starts all over again, with the late night or early morning practice and learning sessions. By this point, weekends barely exist for you. The only excuse for social functions is networking. You look for the right partners and given the vast number of industry contacts and experience you all bring to the table you see it fit to formalise and start a business. A joint venture allows the parties involved to pool resources and share expenses.

A combination of hard work, good coordination and luck might result in you seeing your investment returned. And soon after breaking even you start to make a bit of money aside from what you make at your formal employment. You try your best to save the said ’30-40%’ of your total income. But what are you really saving for this time?

The norm is most people live off of what is achieved at this stage and accumulate funds as much as possible. Of course, there’s an investment every once in a while but that’s never really the point of it. Most people will settle for having the bank interest rate make money for them. However, is this really sustainable as a means of generating wealth?

Let’s have a look at some of the countries with the highest interest rates on their savings accounts. They are:

The mentioned countries may seem to have relatively high interest rates. So why don’t the multitudes rush to invest there?

Well, interest rates on savings accounts have some correlation to the current rate of inflation. Notice on the chart that the highest rates of inflation are accompanied with the highest savings rates. That means the amount of funds invested will increase however the value of the said funds will not make a significant increase. A good example is Zimbabwe’s dollars you could have a million off them but with that million only afford to buy a shirt.

Despite this, the local savings account, with minimal returns, works perfectly well for certain people. Especially those who are looking just to conserve their wealth.

For the rest who always want to see some sort of growth, ( or people who invest for the sport of it) there might be another solution: Based on your level of expertise, one could either approach an investment firm (low cost exchange-traded funds or mutual funds) or privately invest the said funds in fields that you are familiar with.

The trick here is to get the money growing at a rate of return where compound growth works. That means you need to target growth of between 6%-9% and which is what most investment firms offer. They will help you build a relatively safe portfolio consisting of a diversified mix of investments. It always helps if you pick something that you understand.

This kind of investment is not a ‘sprint’ and neither is it a straight line. The best results are seen when longevity is factored in. There is a risk of loss and you have to be prepared to face it. Do not invest what you are not willing to lose. It’s also advisable to set standards for yourself, for example, if 15% of your investment is lost when you get all your money back or again if you investment surpasses a given target then withdraw the principal sum/profit and let the rest keep making money.

With the few principles discussed here and a host of others that you could research and add onto these, you stand a better chance of attaining your wealth goals. ◊ ◊ ◊ ◊ ◊ ◊ ◊