Some of the ingredients of traditional investing will include stocks, bonds, brokers, and banks. But today, rather than creating wealth, they tend to preserve. The reason behind this is that no matter how well thought-out your portfolio may be, investment expenses, inflation, and taxes will greatly impact your attempts at building your wealth.
Wealth creation can be very much within your reach. However, it will require deviating away from the normal distribution investment paradigm. Apart from that, entering into the realm of strategy is also necessary.
If you are among the investors wanting to create rather than preserve wealth, you must aim toward annual returns of 10% or even higher. You certainly cannot achieve this by adhering to the traditional bond or stock recipes or perhaps even in listening to their bankers who tend to provide generic investment recommendations.
The immense value of client’s personal knowledge, resources, and skills must be at the heart of any successful investment endeavour. You need to build strengths as well as core competencies to ensure a successful investment. Most importantly, you need to develop your own strategy based on significant principles.
7 Highly Interconnected Principles Of Wealth Creation
Build on competencies and core strengths – These are considered the raw materials necessary for you to succeed.
Grab every opportunity – You need to build on your knowledge of a specific field. When scanning the environment, you must take a long-range view.
Use networks – Be sure to keep core competencies at the heart of your network. Do not forget the significance of weak ties.
Implement an investment strategy that sets you apart from others – You need to decide where you want to differentiate – an industry, geography or a niche asset class? Again, build core competencies setting your apart and apply an indirect approach.
Prevent threats and handle risks reasonably – Risks and threats might inevitably lead to certain losses. You must manage them through in-depth analysis and careful selection of the core competencies that must be developed.
Observe the current trends and cycles – Timing is very crucial. You must think in cycles. Apply the big picture as well as clarify your investment horizon. Moreover, ensure strategic flexibility. Most importantly, be very courageous, creative, and patient.
Implement with efficiency – You need to reduce or avoid fees. Always implement your strategy at the lowest possible cost. At the same time, watch out for opportunity costs.