3 tips to know how to grow your wealth

Many times we consider our wealth as the value of all the assets that we have accumulated under our name, such as real estate, investments, bank accounts, cars, among others.

However, investments and bank accounts (savings) are part of our financial capital, which represents all our money saved and put to work in the financial market.

There is an additional concept known as human capital, which is the potential to earn income over time. The result of our work together with that of our financial capital, make up our total wealth.

Wealth = human capital + financial capital

During our life cycle, the dynamics of our wealth behave in the following way:

In an initial stage when we are young, our human capital is very broad in terms of future income potential that we could have as a result of future years to work and as we get closer to our retirement stage they tend to decrease.

In contrast, financial capital is low initially. We take time to invest or generate savings, but over time it tends to increase and with it our total wealth.

In such a way that we present 3 tips to grow your wealth over time.

1. Invest part of your monthly income

It is very important that as income is generated, a proportional part is invested, that is, having the discipline to channel resources of human capital towards the construction and growth of financial capital for as long as possible. The foregoing is very important because the discipline significantly potentiates wealth over time.

It is important to note that regardless of the level of income, what is relevant is the percentage destined to investment.

2. Consider investing in variable income

It is very common to associate investment in equities only with risk tolerance, when it is also a concept of time. Investing in variable income is something that characterizes most of the public and private pension funds and these include the age of the holder, that is, the younger the greater participation in variable income and vice versa.

This is because stocks are an asset class that statistically has shown that in long-term horizons are the most profitable in history, despite its ups and downs that are smoothed over time.

3. Diversify through investment funds

Both specialized investment companies for the retirement savings of workers (siefores) and commercial investment funds are widely used investment products to maximize the resources of investors over time.

In Mexico investment funds and siefores total more than 4 billion pesos in net assets, which shows that they are the most demanded investment products to favor the growth of wealth.

The foregoing makes us consider human capital as a catalyst that favors the construction of financial capital and therefore the growth of our wealth.

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Created on Jul 13th 2019 04:47. Viewed 227 times.

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