Creation Vs. Preservation

Everyone aspires to create wealth…

  • Some create enormous wealth in short span of time, others require little longer time horizon.
  • Some are able to create wealth at a blistering pace, others require patience and persistence.

Generally speaking, if you earn more, spend less and invest you end up creating decent amount of wealth in the medium to long run.

Creating wealth is one part but preserving wealth is an entirely different ball game. You need to have different approach while preserving wealth than the one you had while accumulating wealth.

Wealth creation is the accumulation of assets and income over a stipulated period of time. On the other hand, wealth preservation is the efficient management of all personal assets

Wealth Creation and Wealth Preservation

The Central concept behind wealth creation and preservation is to ensure that, your money doesn’t stay idle and in turn lose its spending power. Products like real estate and equity help in wealth generation, properly employed bonds, Debt Mutual funds, gold and other such securities can help with wealth preservation.

In order to protect your wealth, follow a “spread it as you build it” approach. The strategy is to disperse and diversify your wealth across the aforementioned asset classes and categories.

When you’re distributing your wealth, it’s important to keep the following points in mind:

When markets are on Song and you are making good returns on your investments everything seems good but, when the markets are down, it is important to prioritize your goals until they stabilize or bounce back. At such a time, pay heed to critical goals that can’t wait, such as medical bills or your children’s education. Once you shortlist your critical goals, it’s a good idea to allocate assets for the rest of your goals based on importance and availability. “Don’t put all eggs in the same basket” is a well-known mantra one should follow. Having a “B” Plan is important in ever changing world of investments. You can’t always predict your goals. A sudden turn in events can instantly hamper them. In such a scenario, it is important to have a ready corpus of accumulated wealth for critical goals. Many a time, it is the funds kept aside for non-critical goals that act as a reserve for critical goals. Asset allocation and Rebalancing, evaluate your portfolio every three months. This will help you reorganize your portfolio in case your debt and equity proportions are out of place.

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