Third - Wealth Accumulation After being able to maintain a positive cash flow, one would be able to accumulate wealth. How do one accumulate wealth effectively? Many would immediately think of "Save First, Spent Later" approach. One need to be disciplined and should have a systematic plan in place as a guide.
Well, in most part of the world, the two most common needs are Retirement Funding and Children Education Funding. These two funding needs you to be persistant in a realistic and achievable accumulation program you've planned and developed. One must always remember, these two funding is a long term commitment.
Lets look at a senario.
Alex is well aware that he needs to set aside a portion of his salary every montt in order to accumulate money. Over ten years, he managed to save a five figure balance in his savings account. He is proud of his 'achievement'. He felt that he needs to enjoy the fruit of his labour. Alex then went off to Europe for a two week holiday, bought himself a new set of home theater system and paid a down payment for his dream car. As a result, his bank balance has reduced significantly. After consulting his financial planner and working out his plan, he realized that he had lost several years of opportunity to make his wealth work for him. His savings should have go hand-in-hand with careful investment and the early withdrawal of his savings actually had tremendous opportunity costs.
About the author: Chieng Tee Ming has one year working experiences as financial advisor in Singapore. His favourite research area is on financial and wealth management targeted on ASEAN countries. For more articles and full article please visit http://startwealthy.blogspot.com.