Wealth Building And Personal Asset Management Essay

Wealth Building And Personal Asset Management Essay

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Wealth Building and Personal Asset Management: Balance Your Money in a Right Way

Finance is the most important asset in anyone 's life. The lack of adequate financial planning may results in insecure life. Wealth Building and assets management ensures a secure life without any financial crunches and problems. Personal asset management ensures the growth of wealth in the right direction by implementing an investment strategy that aims at balancing the risk in terms of rewards in accordance with the investor’s financial goals, risk tolerance and investment time frame. There are basically three assets classes i.e. equity, fixed income and cash or cash equivalents that behave differently over time in respect of risk and return.

The key considerations while building a portfolio shall be:

1 Investment goals: One need to consider his or his family’s goals and the money that will be needed to achieve these goals. The goal could be saving for your child 's education, buying a new house or a regular pension after retirement.

2 Investment time frames: The time for which one wants to stay invested has an impact on the risk that one can take. Investors with a longer time horizon may feel comfortable taking on riskier or more volatile investments. Those with a shorter time horizon may prefer to take on less risk. Also, if one needs to withdraw money relatively soon, he may consider having a higher percentage of your investments in cash than investing in equity or fixed income securities

3 Your risk tolerance (attitude to risk and reward): Risk tolerance can be defined as the extent to which the investor is willing to lose a part or whole of his original investment in consideration of higher returns. Balancing the risk one is willing to...

... middle of paper ...

...cation by using the switch option provided by the insurer, and move your funds within the options your fund provides, various proportions of - fully equity, fully debt or a combination of both without any tax implications as per the market volatility.
For instance, if you foresee a dip in the stock market, you should switch a large portion of your investment to debt/liquid funds, and switch them back to equity once the market picks up again
Similarly, as your policy moves towards maturity or when you are approaching a milestone in life where finances are required, such as child 's education or daughter 's marriage, you should move a maximum portion or the required amount of your investment at the appropriate time(s) to debt/liquid funds. This will ensure that a large corpus of the investment is secure and guarantees good returns at the time of maturity or withdrawal.

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