Building Wealth in the First Decades of Prosperity

?Experience is a good teacher, but she sends in terrific bills.? Minna Antrim

Let us assume that you are in your 30s or 40s and earning a good income. You are probably paying off a residential or investment property and have invested in a practice (if you are in private practice) or have a well paid private practice or public sector job and it is quite likely you have a growing family to support.

At this stage of your life you are probably earning more money than you ever have before, and also spending more money that you ever had before. School fees. Family holidays. Cars. Boats. You have the money to pay for them all and, after years of study and deprivation, why stint yourself or your family?

There is a very simple answer to this question. School fees and prestige cars are all short-term objectives, but wealth creation must be a long-term objective. Short of theft, fraud and inheritance, holding quality assets over time is the only known way to accumulate wealth.

'If you would be wealthy, think of saving as well as getting.' - Benjamin Franklin

This does not mean that you have to give up every pleasure in the present to finance your future, since life would not be much fun if you did. But it does mean that you need to motivate yourself to take a disciplined approach to setting some of today's income aside to create future assets and this is much more easily done if you have an objective to strive for.

On the other hand, just wanting something badly enough will not make it happen. You also need a plan. A bridge that will take you from where you are now to where you want to be. A good financial plan will help you to visualise your wealth creation goal, study your current financial situation, and then work out a way to bridge the space between where you are now and where you want to be.

Our experience as financial advisers teaches us over and over again that the difference between having just enough to retire on and having the financial security to enjoy retirement to the fullest depends on building a solid wealth creation foundation as early as possible. Time is an essential ingredient of any investment and the extra decade or two makes a quantum difference.