You worked hard and saved and now you have something to show for it. The money you have earned in a few years or through a lifetime is something you want to hold onto and give to your children someday. Or they are funds that you can grow to increase your financial independence. Once you have made some money and are looking for financial advice, one of the questions you may ask is whether asset management or wealth creation is right for you.
The answer to that question depends on several factors. Those factors include how far along you are in your career, what your short-term and long-term goals are, what kind of investments you prefer, and your investment style. Another thing to consider is how much control you want to have over your own investing decisions. Do you prefer to leave much of the management of your money to a professional, or handle it yourself? Large financial firms have departments for asset management as well as advisors for wealth creation, and it is vital to understand the difference.
Asset Management
Asset management is designed for high worth individuals and institutions, usually with a net worth of at least $1 million. Asset management is often used for endowments and retirement funds and tends to be geared toward a more conservative style of investing, although there are a number of growth-oriented asset management approaches. Usually, the asset management advisor manages a portfolio of stocks, bonds, and other investment vehicles. The kind of investments that are made are often at the discretion of the manager, but input from the clients is often considered.
Bonds are fixed investments and have a reliable rate of return over a long period of time. They are among the most conservative of investment vehicles and the risk of loss is negligible. However, those who prefer to grow their investment at a faster rate may opt for stocks or ETFs. Stocks can rise or fall in value according to the stock market, and the value is measured by indexes such as the S&P 500.
ETFs are a collection of stocks in a certain sector or category, and their value is based on the performance of the individual stocks in the fund. Some managers prefer to deal mainly with individual stocks while others have a sector-based view of investing and prefer ETFs. An asset manager should have a diversified portfolio of stocks, bonds, ETFs and other investment vehicles.
When looking for an asset management firm, think about whether your goal is to grow rapidly or over time. Peter Briger in Forbes discusses various approaches to investing for clients. Speak with your manager about what kind of investments are best-suited for your financial goals.
Approaches to Wealth Creation
Wealth creation involves a different approach to investing and managing money than asset management. While asset management involves fund managers dealing with the portfolios of high worth individuals, you can think about wealth creation even if you only have a few dollars in the bank. It is best however to have some funds that you can invest and grow rather than starting entirely from scratch.
Some people start thinking about wealth creation if they find that their expenses are piling up and they are having difficulty making ends meet. Others might have enjoyed some progress in business, but want to grow their funds further. The road to growing your funds begins with deciding what your short and long-term goals are and deciding how to achieve them. This approach is more active than asset management and often involves an entrepreneurial spirit, although it is possible to continue working at your 9-to-5 job while finding original ways to increase your funds.
A number of wealth management gurus recommend brainstorming ways to increase your income dramatically in a short period of time. This can give you confidence to carry on and capital to invest in projects. Several strategies may be recommended, such as radically cutting costs, finding ways of generating passive income such as selling things on websites or investing in undervalued stocks. There are many financial advisors who provide guidance on wealth creation, and it is a good idea to find a professional with a track record of success and who is in tune with your financial goals.
Improving Your Financial Health
Just as people who want to be in better physical health seek out the best regimen and the most qualified doctors they can, so those who want to improve their financial health search for solid advice and trusted financial professionals. Before consulting with the financial advisor, consider what you want to achieve with your money, how much time you are willing to devote to thinking about investing and growing income, and you are investment style.
Whether you are thinking about starting a new business, supplementing your regular job with income producing investments or want to make sure you retirement funds are secure, look for financial advice that can help you achieve the lifestyle you want.
