Building wealth for retirement (or a Ferrari…)
How exactly do you get wealthy? How do you prepare a solid nest egg for retirement so you can live out the retirement you long for rather than having to settle for? How does one acquire a luxury Italian sports car. Familiar questions? The answer can often appear elusive, unattainable or complex but really it can be quite straight forward…
Wealth, from a financial sense, is generally achieved one of three ways:
- By starting a business/company/property venture etc, committing a large majority of resources to the venture and ultimately selling part/all of your assets/shareholding for a large capital gain. Many wealthy people build their fortunes this way. There is nothing wrong with this but it all comes down to risk and return. These people often risk it all, reinvesting profits to further build the business/buy more property, using leverage (borrowing money) to exponentially increase their return on investment. This method has created billionaires and bankrupt just as many. It involves the greatest risk but ultimately holds the largest potential return.
- By putting together a regular savings plan, utilising the potential of your human capital (your ability to work/upskill etc) and investing surplus income over the long term, taking advantage of compounding interest. This generally involves far less risk but can take longer and to be done effectively, usually requires some careful planning.
- By relying on the right six balls rolling down the chute this Saturday night. By far the quickest, painless (and most unlikely) way to achieve wealth…so long as others don’t share your luck that same night…
Which one is right for you? Well putting no. 3 aside (if this IS your retirement plan, then we need to talk…), then that is a discussion you would do well to have with a range of different advisers:
- Starting a business/company/property venture: you would do well to seek advice (at a minimum) from an accountant, a solicitor and a business mentor
- Regular savings plan: would best be achieved by visiting a good financial planner who can work with you to put a comprehensive long term plan into place.
DISCLAIMER: The above comments are general in nature and DO NOT constitute financial advice. Before making any decision, we recommend you consult a financial planner or investment adviser to take into account your particular investment objectives, financial situation and individual needs. A full disclosure statement is available on request and free of charge.