Not everyone is getting this right. Making the most of your assets to create lasting wealth is a strategic system of planning and timing.
In the pursuit of financial well-being, individuals often grapple with the challenge of making the most of their assets. Wealth managers play a pivotal role in guiding clients through this complex landscape, helping them navigate investment opportunities, mitigate risks, and build a foundation for enduring prosperity.
Let us take a look at an example case study;
Meet Sarah, a 45-year-old professional with a steady income, a diverse investment portfolio, and aspirations of financial security. Despite her diligent efforts to save and invest, Sarah finds herself wondering if she is truly making the most of her assets.
So what challenges is Sarah facing?
- Passive Investment Approach:
Sarah has been following a passive investment approach for several years. She invested a lump sum amount in a diversified portfolio and continued with periodic contributions without actively managing or reassessing her investments. While she enjoyed some market growth, she was not leveraging the full potential of her assets.
- Lack of Goal Alignment:
Sarah had set financial goals initially but had not revisited them in years. Life circumstances, such as a recent promotion and plans for homeownership, had changed, but her investment strategy remained the same. The lack of alignment between her investments and evolving life goals was hindering the creation of lasting wealth.
- Minimal Tax Optimisation:
Sarah was unaware of the tax implications of her investment strategy. She had not proactively sought advice on tax-efficient investment options, resulting in potential missed opportunities to minimise tax liabilities and retain more of her investment returns.
What steps did Sarah actively take to improve her plan?
- Optimised Portfolio Performance:
Sarah decided to transition from a passive to an active approach to portfolio management. She began regularly reviewing her investment portfolio, assessing market conditions, and adjusting her asset allocation to align with her risk tolerance and financial goals. This proactive stance allowed her to capitalise on market opportunities and mitigate potential risks.
- Goal-Based Investing:
Realising the importance of aligning investments with specific life goals, Sarah scheduled a meeting with her wealth manager to reassess her financial objectives. Together, they created a goal-based investment strategy that factored in her promotion, plans for homeownership, and long-term retirement goals. This shift ensured that her investments were purposeful and directly contributing to her vision.
- Tax-Efficient Strategies:
Sarah worked with her wealth manager to explore tax-efficient investment strategies. By proactively seeking ways to optimise her tax situation, such as contributing to tax-advantaged accounts and strategically realising capital gains, she significantly enhanced her after-tax returns. This adjustment not only preserved more of her wealth but also contributed to the long-term growth of her portfolio.
Sarah’s proactive approach to wealth management yielded positive results.
Sarah’s case underscores the importance of transitioning from a passive to a proactive approach in wealth management. By actively managing her portfolio, aligning investments with evolving life goals, and implementing tax-efficient strategies, she transformed her financial trajectory. This example case study serves as a reminder that making the most of one’s assets to create lasting wealth requires continuous engagement, strategic adjustments, and a proactive partnership with a wealth manager.
Maximising assets to create lasting wealth is not a passive endeavour. Individuals must proactively engage in the ongoing management of their financial affairs, working in tandem with their wealth manager to continuously improve their strategy. Managing wealth in this way allows individuals to unlock the full potential of their assets and build a foundation for enduring prosperity.
If you, like Sarah, want to work with a wealth manager who can help you create lasting wealth for yourself and family, contact us today.