wealth management

Wealth Management: A Few Aspects we Should Stop Overlooking

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Wealth creation is largely an elaborate process for most – at least for those who haven’t really amassed it (wealth) overnight. Though we don’t acknowledge it often – a financial cushion is simply not about building emergency funds. As integral a part of the wealth creation process that we are talking about, for us a “financial cushion” is created the moment we start talking about finance management or wealth planning.

As we go through the post in our quest for the less known ways with the help of which we can achieve our desired level of wealth creation, we will understand how important a role the sense of self efficacy ends up playing here.

How is the Concept of Self-Efficacy Linked to our Finances?

Yes. We don’t find ourselves understanding or rather discussing the psychology behind wealth-creation. And once we start doing that, we inevitably go back to Albert Bandura’s concept of self-efficacy, which actually goes on to determine a person’s thoughts, actions, motivation and behavior in the most powerful manner imaginable. He pointed out that people with a powerful sense of self efficacy are capable of viewing difficult tasks as challenges that need to be mastered in contrast to people with a weak sense of self-efficacy who view these same tasks as risks that should be avoided.

Since his revelations, financial experts at large have actually been trying to link the concept of sense of self-efficacy with finance. As Bandura had pointed out, self-efficacy is bolstered by various factors including:

  • Experiencing success
  • Controlling the emotional and physical responses
  • Choosing good role models
  • Reacting to encouragement

Why is it Important to Understand and Acknowledge the Role of Psychology behind Wealth Creation?

When it comes to financial success your sense of self-efficacy is definitely bolstered by your ability to pay off a large debt or for that matter staying away from expenditures on things you wanted to buy but didn’ need. Think about your friends early in their careers – living from paycheck to paycheck and often turning to the expensive quick loans in order to sponsor immediate needs. You are not required to do the same because you had planned your finances way before you had actually started earning. Do remember all these can act as major catalysts as far as laying the foundation of the sense of self-efficacy is concerned.

One of the most overlooked parts of wealth-creation is the psychology behind wealth-creation itself. The way we manage money actually has a lot to do with how we perceive our financial responsibilities. A lot is determined by the role models that we choose for ourselves. For instance, if we see someone in our family or friend circle fulfilling an almost impossible financial task, then we’re bound to be inspired to replicate the sense of self-efficacy. Additionally, a lot is dependent on the role models that we choose to be. The way we deal with our finances – or rather respond—to our pecuniary challenges from time to time- goes on to help us set examples for our kids as well. The need for prioritizing wealth management becomes a habit with them.

Understanding the psychology behind wealth-creation is important because only when you’re estimating your emotional reaction to certain financial responsibilities properly can you work towards changing them if needed.

For instance, today if you think that you will absolutely drown yourself in debts just in order to get out of your mortgage then you probably are someone with a very poor sense of self-efficacy. You can work towards developing a more positive change when it comes to the way in which you’re thinking about your financial responsibility now.
Besides mastering the psychology behind wealth creation, do make sure you are paying attention to these often overlooked aspects of this particular process.

How Often are you Replacing your Car?

You probably aren’t one of them who think that you should only change or rather replace your car when you NEED to! What we don’t realize is that every time we’re taking a loan from the bank to buy a new car the bank holds the title until we clear off the loan. Your car notably depreciates by 25% in the first year and by 50% in the next two years. Most of us end up trading our old car for new ones without even using the previous car optimally. However, we have already paid taxes, insurance, and loans on a depreciating asset. We might as well always refuse to acknowledge this but it’s only the car dealers who end up making profits in this case. There is a dire need on our end to stop selling assets too soon. You will understand how your efforts towards wealth creation will suffer owing to this habit of yours.

Investing

While saving remains a major financial goal at an early age—investing doesn’t. Ask most of the millionaires out there and they will actually tell you that investing is at the heart of prudent wealth creation. The tried and tested mantra in this regard is to subtract your exact age from 100 followed by investing the percentage of that number in equities and related funds including exchange traded funds, mutual funds and index fund.



How are you dealing with your Monthly Subscriptions?

Be watchful of your monthly subscriptions and your membership fees. While it feels great not to pay off all the dues at one go, do let us tell you monthly subscriptions and membership fees will eventually find you at the receiving end if you are not really keeping a check on them. There are so many times when even unused subscription fees end up killing your savings! Don’t underestimate the need for going back to or rather reviewing your subscriptions every month. If you are not using something do make sure that you are cancelling the same without fail. If you are prioritizing control over your expenditures you simply can’t ignore these subscriptions at any cost. Don’t pay up for what you don’t need. That’s perhaps the cardinal rule of personal finance management.

 


A Simple Guide To Wealth Management

Managing your wealth can in fact be pretty difficult. So many people view the rich people of the world with distain but maintain wealth is something that is a skill in itself. There are so many ways you can go about it if you have the initial capital but very few people actually know what the most effective methods are.wealth management

In this article I will try to highlight three of the simplest methods and traits of a successful investor and wealth manager. There are also many companies out there that can provide this service for you and that again will be explained within this article.

The economy we are part of is changing consistently and at the moment is extremely fragile and I believe large scale investment is too risky but small scale investments and a solid plan can really stand you in great stead for the future and when the economy settles down some more then investment can increase further.

A Plan

It is essential that you have a plan with your money. There are too many people out there who invest without thought or care. In a world that is dominated by money you will find that people become more and more ruthless to get it and those investors who have the disposable income are at a higher risk of losing a lot of it through poor investment and taking poor advice.

There are many companies out there that have a strong track record in wealth management, Brett Lankaster is a boss of one of the city’s leading companies and he values planning for the future extremely highly.

The plan doesn’t have to be too detailed, at the end of the day, investment is something that is down to you as a person, it is your money and you can essentially do as you like with it but I firmly believe forward thinking and planning is essential.

Re-Investment

When you have money you can re-invest to get more, that’s the way the business world works nowadays. If you have that capital, the potential to make more is vast and there are numerous ways to go about it and each of them differ in importance and value. If you have a particular interest in one area it can be a great way to engage with your investments.

There are thousands of investors out there and it is down to you as an investor to work out what direction you want to take with your assets.

Some go for short term profit investing heavily in stocks and shares and there are some people out there who go for more long term and steadily maturing things like government bonds.

Risk Taker

If you want to increase your wealth you have got to be a risk taker, you get nowhere in the investment world if you aren’t willing to go out and explore the investment world.

There are just so many options and providing you have the right attitude and knowhow a lot of enjoyment and profit can be had.

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Tom Sasse has experience in the writing industry and has completed work for some very high profile clients. He has a very particular style of writing that is quite chatty and engaging.


If Income Taxes Increase, Will Rich People Leave the USA?

If Income Taxes Increase, Will Rich People Leave the USA?

Ever since this country was founded, Americans have hated paying taxes. So it should come as no surprise then that many rich American citizens are considering leaving the country and renounce their citizenship to avoid paying those taxes.

The Abroad Tax Issue

The United States is one of the few countries world-wide to tax its citizens on income earned, even if they earned it out of the country. For example, you could work in France for an entire year and still owe income taxes in the U.S. based on how much you earned. This issue has been a leading cause of more and more Americans renouncing their citizenship.

In 2011, almost 1,800 Americans gave back their green cards and renounced U.S. citizenship. This was nearly eight times more than in 2008 and more than 2007, 2008 and 2009 combined according to IRS statistics.

Many Filing Abroad Issues

While the last several years have experienced an increase in the ease of filing taxes from more resources to increased software options, overseas taxpayers still have many issues they must contend with. A report released by the National Taxpayer Advocate’s Office, an arm of the IRS, said that heavy paperwork, few online filing options and language issues hamper these taxpayers.

Other issues that weigh on overseas taxpayers are two old requirements: Reporting foreign bank and financial accounts. This might not seem like much, but if you have joint accounts you need to list all assets in them. This means if you are married to a foreign national, you are required to list all of your joint assets to the IRS.

According to many tax lawyers, tax questions arising from listing bank account assets are a big reason that many U.S. citizens renounce their citizenship.

Abroad Taxpayers Recourse

There are currently about 6.3 million U.S. citizens living abroad who pay taxes on incomes earned overseas. When they have had enough of paying taxes to a country they don’t live in, they are left really with only one option: Renounce their U.S. citizenship.

This problem has caused many sleepless nights for U.S. citizens living abroad as they wrestle with tax problems and keeping their citizenship. Many of these overseas citizens have been faced with large fines and thousands in back taxes attributed to lack of information related to tax regulations.

While Congress has gotten involved and is researching ways to reduce red tape and undue burden on taxpayers, it isn’t likely to be a rapid change. For now, paying taxes overseas can become a gigantic headache requiring the services of CPAs and tax attorneys.

If you find yourself in this situation it is advised that you speak with an experienced tax attorney.

Author Jason Lancaster writes several different tax-related articles for Olson Tax Consulting, a Denver tax attorney who works with businesses and families to help resolve tax issues.


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