Creating Wealth

 8-Step Process for Wealth Growth

  • Step 1: Find your profile.
  • Step 2: Get free of debt.
  • Step 3: Look at sound investing.
  • Step 4: Get proper advice.
  • Step 5: Gear up where necessary.
  • Step 6: Check before signing up.
  • Step 7: Minimise your tax.
  • Step 8: Protect your money.

Step 1: Find your profile.
The first thing you have to do is work out your personal risk profile. When talking to your financial adviser you will probably have to complete a questionnaire to determine your profile. Once you know what type of investor you are, you can then make more informed decisions about your investments. Be clear on what you want to achieve. Once you know, you can work backwards to find out what you need to do to achieve your goals. For example, are you only interested in investing for the short-term? Are you looking at funding education for the children? Is your goal to build wealth for retirement?

The type of investment you choose will depend on whether you are looking for capital growth for the future, or an income to support your lifestyle at the present time. If you need income on a regular basis, there is no point investing in speculative shares that don’t pay dividends. You may have to look at fixed interest, or high yielding shares, or property trusts, as an alternative.

In determining your investment, ask yourself the following:

  • “What are my goals?”
  • “What is my investment horizon?”
  • “Do I want income or growth?”
  • “How will I stand if the value of my investment falls?”
  • “What are the tax consequences of my investments?”
  • “Should I talk it through with an investment specialist?”

Step 2: Get Free of Debt

There is only one basic formula for getting debt free and that is:

  1. Stop creating more debt.
  2. Pay off all existing debt.
  3. Continue to live debt free.

Everyone can become debt free by following these 3 simple rules. It’s not magic, but you must stop creating new debt.

The other best way to handle debts is to avoid them in the first place. But reality is that people work differently and for most us it is difficult to do this.

Some suggestions for getting out of debt trouble are:

  1. Make sure you know exactly who you owe money to and how much you owe. Also find out the amounts you are paying in costs and interest and the due dates, as well as the penalties involved if you don’t meet the payments on time.

  2. Look at every possible way you can increase your income.

  3. Look at every possible item you can slash off your budget so your spending can be decreased immediately.

  4. Do not take on any more credit until you are in better financial shape. This may mean hiding or cutting up your credit cards so you won't be tempted to use them.

  5. If you find that you are not getting anywhere fast and you are not able to make payments for all creditors on due date, contact them and see if you can come to an arrangement to pay them off over a period with a fixed amount that you will commit yourself to.

  6. If you need help, get hold of the Citizen’s Advice Bureau, your accountant, solicitor, or a financial planner experienced in these matters. Sometimes it is good to talk it over with someone who is outside your situation, because often they see things more clearly.