Successful Wealth Accumulation and Management
|
By :
Ed McDonald
Submitted
2009-12-06 18:52:42 |
A successfully wealth management strategy requires realistic and useful financial goals. Your financial goals are the signposts on the highway to a secure financial future. They serve as your guide to your financial success and it makes perfect sense to keep your goals very specific in view so that you you can direct your energies toward achieving them. Financial goals are important because they help us to organize and direct our financial lives, providing a framework for decision-making. They can help us cope, provide some control in an environment where many things seem out of control, and help us visualize our financial future. Once you have understood the importance of proper goal setting, your next step is to figure out the important aspects of wealth accumulation.
Here is one of the most important aspects of wealth accumulation that will help you measure where you stand currently and how can you improve your future financial situation.
Retirement Planning:
Planning for retirement is challenging and even with sophisticated financial planning, you could end up in financial trouble. Bad things can happen but that doesn't mean that you should give up on your financial planning. Retirement planning is a like a race and earlier you begin, the longer you will have to accumulate funds and capitalize on compound interest. A plan designed to meet specific retirement goals may be separate from or part of the investment building block. You may not see 8% or 10% returns making much of a difference during your the early days of your retirement fund but think of the golden years when you have accumulated a couple of hundred thousands in your retirement account and you would notice that 8% to 10% returns would make a huge difference. Here is an example. If you earn $50,000 and save 10% of your paycheck in your retirement plan, you're putting away $5,000 a year. Now 8% return on $5,000 is just $400 but its impact is huge when you consider compounding and 30 years of investing. Let's take a look at the effect of compounding and investment timeframe. For the sake of simplicity, let's assume that you have accumulated $300,000 in your retirement funds in 30 years. Now,at this stage with 10% return, you're earning $30,000 a year in interest alone. On top of that, this $30,000 will earn you an extra $3,000 next year if you assume same rate of return.
According to the 2006 Retirement Confidence Survey, less than half (42%) of working Americans have made a retirement savings calculation and 70% have begun to save for retirement. Unfortunately, this means that 30% of workers have not yet begun saving. Most experts believe that regular, systematic savings is a habit that is best established early and maintained, not only throughout the working years, but into the early stages of retirement since people are living much longer. Today, many people spend as many years in retirement as they spent in the workforce. In the past, financial experts have counted three distinct sources of income in retirement: Social Security, company pension, and personal savings. Now with the growing concern over the future of Social Security and reduction in benefits offered by employers, and the low personal savings rate, it may be impossible to some people to survive their retirement years without making drastic changes such as reverse mortgages and debt. As you can see, this changing environment makes retirement account even more important.
Continue to read about Home Ownership and Wealth Accumulation
|
Author Resource:-
Ed McDonald has 10 years of diversified experience in financial planning, retirement planning, asset allocation strategies and private equity. His also writes as a freelander for different financial websites and newletters.
|
Article From Fiscalwealth | Personal Finances, Investment and Wealth Management
|
|
