Wealth – from creation to distribution

Wealth creation is simply building up your net worth over time. But how do you create wealth? Is wealth creation only for the rich and famous? Not at all!

While some persons are born into wealth, many others spend a long time creating their wealth and it’s not as difficult as it might seem.

There are many reasons why you should create wealth. Having wealth allows you to build up assets that can be passed down for generations. It is also beneficial, as you don’t need to stress about how to pay your bills each month. If you want to become wealthy, you need to learn how to create wealth.

Wealth Creation

• Begin by looking at how you spend and where you spend. Are there expenses you can cut out? Relook at your budget in detail and adjust your savings upwards.
• Try paying off high-interest debts like credit cards and limit the hire purchase sales, as these carry huge interest over the period. This would allow you to free up future income that you can put towards accumulating your wealth.
• Create an emergency fund. This would allow you to set aside money for those unexpected life events that can erode your savings accounts.
• Earn extra money. While your full-time job may limit your income, look at your God-given talent and put that to use to earn that extra cash you can save.
• Invest. It’s either you work for money or let your money work for you… or both. Try investing in some easy to manage stocks; look at your personal life insurance policy, it may allow you to invest extra cash, as this is a sure disciplined way of saving and building wealth. Increase your retirement investment, it’s another sure way of savings. You don’t want to retire and be a pauper.
• Property. This is a good way to build wealth. It’s rare for property value to decline, so your risk is low, and gains are high. This can be in the form of some rental apartment units in a decent location. This would eventually pay for itself and continue to generate income for generations once it’s properly maintained.
• Life insurance, as simple as it may sound, creates immediate cash upon your death, allowing your dreams and goals to be completed with a sizable portion of your wealth and assets being in cash.

Wealth Management: After you create your wealth, you need to manage your assets. Based on the type, size, location and compilation, proper management is key to maintaining their value. In some cases, you may have to seek advice from a wealth management consultant or your financial advisor. They would let you know what assets you can dispose or add to better enhance your wealth.

Wealth Protection: While some persons invest in property and other non-liquid assets, you would have to insure these against all perils. It may appear as an expense; however prudent financial advice dictates that insurance would protect your assets and the years of hard work in creating them. Your biggest asset is you, insure yourself first. Your health is your wealth.

Wealth Accumulation: This is the period that you have finally reached your desired goal of creating the wealth. This includes having proper management and protection of your assets, knowing what works for you to continue the growth. Limit the losses, if any, and you are ready to move to the final stage.

Wealth Distribution: This is where you want to distribute the wealth that you accumulated over the years of your working life, all the sacrifices you made to achieve what you have, to make your family comfortable and secure. There are many ways to distribute your wealth. This can be done while you are alive or upon your death. In the United States, there are taxes to be paid upon your death when property is disposed or transferred. This does not apply here as distribution can start while you are alive to avoid heavy fees in probating property of significant value upon your death.

Selecting the appropriate method involves the ‘who’, ‘how’, and ‘when’ questions. This is who gets what, how should you dispose or transfer the assets, and when should you do so.

In my next column, I’ll discuss more of wealth distribution with a focus on Probates of Wills and Estate Administration.

“There is no success without sacrifice”. —Unknown.

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