These days, the term wealth management is quite in the buzz. And it’s something you’ll hear around quite often. But what does wealth management mean and what’s making it grow so exponentially? That’s one burgeoning question among a list of queries regarding wealth management.
There are many of us who want to know about wealth management and opt for it. From what we’ve seen, people have an inherent misconception that wealth management is a thing only reserved for wealthy people. We always think that wealth management is only possible when we have generated that ‘quoted figures’. So is there any exact figure which will make you eligible for wealth management? Let’s find out.
What is Wealth?
Wealth as a terminology means an abundance of money or possessions. That’s how the dictionary puts it at. However, wealth is much more than that and means the value of the assets, income or net worth of an individual. Some may find the word wealth similar to finance. However, finance means the management of money whilst wealth is about the value of assets owned by the person.
What is Wealth Management?
Wealth management refers to the management of assets, liabilities, finances, and incomes of an individual or an organization to help protect the financial wealth. The beauty of wealth management is that is a broader term than financial management or portfolio management and incorporates aspects from both of them into it. Wealth management is a commonly used practice that helps to plan the day to day financials, accounting and taxation liabilities, estate planning, retirement planning and much more.
Meanwhile, financial management or portfolio management only looks at a section of things. So you can even say that portfolio management and financial management are included within the purview of wealth management services.
For an individual, the concept of wealth management looks at the aspect of understanding the financial needs of the people and forming a simplified approach which will help to make a suitable investment so that the financial goals of an individual can be met. It also looks at the aspect of handling the enhancing the income and limiting the risks associated with the investments to help generate the highest of returns.
How Much Money do you Need for Wealth Management?
This is one of the first and foremost queries that is often asked by people around. Is there any quotable amount that says now you are eligible to go for wealth management? Sadly there’s no such thing. And that’s the best part of it. Wealth management is not just limited to the rich of the societies and everyone with a wealth-generating motive can go for it.
For say, you are currently in your 30’s with no investment and you have a desire to retire with a corpus of Rs 1 crores by the age of 40. How do you plan your investment and wealth in such a way that you can lay claim to that sizable corpus when you need it. How do you manage your wealth in such a way that it can grow at the projected rate? That’s what the concept of wealth management looks at.
At the age of late 20’s we obviously tend to have an inherent desire to invest and build a fund for future needs, be it ranging anywhere from going for a vacation to building a house or funding child’s education. At the very moment, we also have some responsibilities shouldered on ourselves like taking care of the family or more. And these financial goals and wealth-building aspirations both need to be funded by the income source.
For say you have a monthly income of Rs 50,000 and your expenses roundabout to Rs 40,000 a month, then you can put Rs 10,000 into the investment fund for generating wealth. This shall help you fulfill your financial obligations and also start your wealth-building journey.
How to do Wealth Management?
We aforementioned an example whereof as a person of late ’20s, you earn a monthly income of Rs 50,000 and desire to build a corpus of Rs 1 crores by the age of 40. For that, you should invest your money in such a way that you can derive the required returns that would meet your goals. You can choose from a plethora of investment instruments available in the market and opt for the same to achieve your goals.
However, wealth management isn’t merely about seeking a viable investment option and vesting your money. It looks at managing your expenses, finances, tax obligation all the while also taking care of your wealth-building goals so that your financial goals can be realized upon. In a way, wealth management helps you to plan all your financials, incomes and liabilities to provide you with the best wealth generation procedure or road map.
The Bottom Line
There’s no specific figure that says now you are eligible for wealth management. It’s an expansive term and anyone with a wealth-building desire can go for it regardless of the amount of money with them. They can plan their wealth-building aspect in accordance with the income and expenses and the desire to build the required level of the corpus.