WEALTH has so many connotations. However, in the context of this piece, wealth is described as the abundance of items of economic value and freedom. For many, it is mainly about money, but that is only partly true, wealth is different from riches and riches are a part of wealth. There are different constructs of wealth: financial, health, social network, intellectual, cultural, and influence. Being wealthy is not about money alone; being wealthy is majorly about value and essence. When you create wealth, it benefits the people around you, and the people who will be there after you are gone. Many people confuse getting rich with being wealthy because often the two words are used interchangeably. They don’t mean the same thing, getting rich simply means having a high income and that could be short-lived, especially without corresponding assets. It simply means having more spending power than the average person. A distinctive explanation of riches is the proceeds from winning a lottery — you would be rich because there will be access to fund than most other people (hence more spending power), but you could just spend it all on luxuries and have none left at the end, stripping away the status of “rich”. One of the stereotypes about rich people is that they drive flashy cars and use latest gadgets. Buying a brand-new car or latest mobile phone from savings is nearly always a poor financial decision.
According to experts the minute you drive a car off the lot, it loses 11 per cent or more of its value. That cannot translate to being wealthy, the habits of rich people are very different from those of wealthy people. To be wealthy, savings must go into investing and the returns on the investment can then be utilized on luxury items. Consequently, building wealth requires sustainability and perseverance. That said, wealth usually involves the difference between assets and liabilities and even much more. One can be financially stable and yet weak in other wealth constructs mentioned above. I agree that financial independence is about money, but living a wealthy life is actually not, it particularly involves freedom and enjoying good health(emotional, physical,spiritual and mental). However, true wealth is when the passive income from assets and financial instruments such as property investment, bonds, securities, stocks, share, and other investment opportunities generate enough income to provide financial security. More so the income is high enough to cover costs of living that you no longer need to work to survive. Therefore, wealth is the foundation for financial health and freedom for a lifetime and even for your heirs.
To substantiate the above assertion, opinion of some residents of Abuja the federal capital territory of Nigeria and Lagos State the economic nerve center of the country was randomly sampled on what wealth signifies. Here are some key findings in the survey from the respondents, building and owning a house (65 percent), having millions (Naira) and sufficient fund in the bank account (96 percent), freedom and spending time with family (42 percent), and owning the latest cars, phones, and tech gadgets (92 percent). The finding of the survey surprisingly indicated that the majority of the respondent cannot distinguish between being rich and wealthy. Because almost those surveyed felt that sufficient money (Naira) in the bank account and having latest gadgets signifies wealth. Truly wealthy people spend money on assets (like businesses, knowledge acquisition, property, social network, influence and investments) and not liabilities. They spend money on things that improve or enhance wealth, net worth and also give freedom. Furthermore, wealth is measured in time, not in Naira. That is how many days could you survive if you stopped working today?
The simple approach to survive is to own investments in businesses, assets, and other wealth instruments. More importantly, having a net worth that generates enough income that can sustain you for a long time without having to work for money is key. In addition,being wealthy instead of being rich means that you have the freedom to spend your time however you want and you also do not have to stress about paying any bills. Invariably, wealth creation can be defined as the process of building a stable, steady income and the consistent accumulation of assets over time. Therefore, to create wealth individuals, need to be disciplined with savings and investments including expenses and debt. It is important to state that we are all limited by the number of years we have to be able to run around actively. Because either ready or not, retirement is coming and it will change things. Therefore, to create wealth, take good care of your health, invest in education and improve your wealth knowledge, spend money on assets that can generate more money continuously and passively. Make this a culture until the passive income from various assets is higher than your cost of living. Then you achieve some level of freedom and a secure financial future. Eventually, it is usually not how much fund you make that matters but how much of it is kept and how long that kept fund works for you and provide continuous cash flow.
A big part of building wealth is determined by regular habits, so start investing early, educate yourself to improve your skills, keeping fit, and enjoying good health (emotional, physical, spiritual and mental), be disciplined, avoid debts, maintain and increase assets, take an appropriate level of risk is an important step to grow wealth and stay ahead of inflation. Many people can easily become rich due to hard work, but only financially intelligent people can become wealthy, and develop a huge net worth. However, that will take a strong financial education and strong investing culture. Significantly, it does not matter how much funds you have today in savings or you earn, having wealth creation strategies, being disciplined and continually getting informed, can still help build vast wealth. Remember not only does wealth creation help live life more prosperously, it also helps secure the future of the next generation. The absence of effective wealth creation strategy such as the principle of compounding may result in delay or compromise in one’s financial goals. Simply put, wealth strategy can involve the accumulation of assets, mindful spending, keeping expenses in check, budgeting, inculcating healthy habits and having stern focus on investing or building additional sources of income. To reiterate this includes property investment, bonds, securities, starting up a business, stocks, share and other investment opportunities.
Even after considering all these adequate measures according to reviewed large volumes of literature, to protect the wealth is equally important. Both wealth creation and wealth protection contribute towards greater financial success and security. It eventually gives these life goals- financial independence, future security and a comfortable retirement.
In conclusion, protection of financial future, via a combination of carefully selected life assurance policies, tax planning, and a diverse investment portfolio management, is a necessity for an enduring wealth. A protection strategy can protect you and your loved ones in the event of an injury, illness, disability or, in the worst case scenario, death. Wealth can be earned as well as lost. This is why it is important to protect your investment portfolio even while trying to grow it. If you are concern about enhancing or on how to build an effective wealth protection strategy or having an investment plan to create wealth, you may need to urgently reach out to a professional for essential advice. Good luck!
- Dr. Olubiyi, an entrepreneurship and small business management expert, writes in via: firstname.lastname@example.org