What is Wealth Management? Why does one need it?

 

The textbook definition of wealth management as you Google, would be for HNIs and Businessmen who take the help of paid professionals to manage their funds. This, generally, if you ask around at a party or a social gathering would be the perception nonetheless. That ‘Wealth Management’ is employed when there is substantial ‘Wealth’ to be managed and one employs a professional to do so.

 

 

However, let’s just stop for a minute and question the basics here.

For instance, I am a salaried professional earning INR 50,000 per month. I spend a lot of what I earn but do save about 30% (although most of us wouldn’t have this number). That means I save about INR 15,000 per month. That translates to about INR 1.8 lacs a year.

Which means in 10 years, I save about 20 lacs.

That ain't much now, is it ?!?

So, if I just were to assume that my savings grew at 15% per annum, what would my 20 lacs become at the end of 10 years?

INR 44 freaking lacs !!! Ding...ding...dingg

And, I haven’t assumed any increase in my salary or my savings over the next 10 years.

Even if I take a 10% hike in my savings every year (which will be a combination of my increasing salary and increasing prudence in spending as I grow older), the number at the end of 10 years becomes INR 65 lacs!

Now, I don’t mean to be throwing large numbers and intimidating you. But my premise is simple.

You, me and even the average Joe NEEDS Wealth Management.

We don’t wanna do it, because –

 1)  We feel there is a cost involved. That idiot is gonna charge me a hefty fee for his advice

  2)  We feel we are normal fry. I barely save. The guy is gonna laugh at me when I blurt out the “amount” I need  him to advise on.

  3)  I don’t think there is a need for a wealth manager. I have TV, newspapers, internet, media, hot anchors on CNBC telling me where to put my money

  4) I don’t trust anyone with my money. I’m going to do it myself. I don’t wanna end up with another insurance policy my banker sticks on to my head

  5) I  have heard people being conned all the time. All investment avenues are con-jobs and i’m just gonna trust my good old FD.

And So on...

But... if I were to tell you, that none of the above reasons should deter you from looking at this very important aspect of your life because it is as important as having a family doctor or a dentist or a chartered accountant or even a lawyer.

 ‘Cos this is about your hard-earned money.

If you don’t let it fight its own battle and work as hard as you, you will ALWAYS...& I mean ALWAYS be in short supply.

Let us assume the following scenario:

If you spend about 70% of your income today, you are spending about INR 4.2 lacs in a year on an income of 6 lacs. In 10 years, you will need INR 8 lacs i.e. 133% of your current income just to sustain these expenses. And I have only considered Government inflation here – at 6% p.a.

You can either hope and pray that salaries will increase enough to catch up with the expenses or you start “managing your wealth” today.

Fact of the matter is; Wealth management is not restricted to HNIs. It shouldn’t be.

Whatever you have today is YOUR WEALTH.It deserves the same amount of attention as do the crores for some high flying businessman.

So stop beating around the bush and start seeking some answers! You would be surprised as to what you would find.

 

That's it for now. Stay tuned.....there's more where this came from.