The mechanics behind wealth accumulation

by | Mar 5, 2015 | insurance

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Wealth accumulation is something that plays on almost all our minds every now and then and is deemed to be the primary objective of every working individual. Addition is not how one actually accumulates wealth. This happens through a carefully crafted process of multiplication that not many are aware of. Simply putting together salaries and other earnings will not help you accumulate wealth and neither will sudden windfalls in stock markets stimulate the same. This is a conventional technique used by multiple investors to try and grow their portfolios and wealth in turn. High income levels are not the only deciding factor behind wealth accumulation. There are two essentials factors which majorly come into play here.

Wealth accumulation depends on how many years an individual has consistently saved and invested money along with the actual proportion or chunk of funds from his/her income that has been devoted solely to return garnering investments including stocks and other options. Stocks should not always be possessed without giving a thought to the risks involved and other aspects. Most wealthy individuals have always allocated a fair portion of their income to stock market investments. Exponential movements have always taken precedence when it comes to proper accumulation of wealth.

The rate of return on investments matters immensely in addition to the total time period over which one’s wealth is steadily compounded. The first step to take is build up some savings of your own and thereafter look to have a little authority over both return rates and the time period mentioned above. This will help you immensely with regard to growing your wealth. Wealth accumulation also depends on how well you can scale up the average rate of returns on an annual basis. This has to be done thoroughly carefully structured and delineated investments in securities, financial instruments of banks and even stocks if you feel fit. However, all such investments have to be planned properly, something that is a little difficult for most individuals. A financial planner can help you immensely in this regard and will definitely get you on the road towards saving and accumulating wealth for the future.

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