Chartered Financial Planner Danny Cox , our head of Financial Practitioners, outlines how you can build wealth that will help you and your family achieve your ambitions.
Having sufficient wealth to provide for ourselves and families is an ambition we all share - but aside from those who may inherit wealth or strike it rich in business, most of us have to make a lifelong commitment to growing our assets slowly and steadily.
Along the way there are other important priorities such as buying a house with a mortgage, raising a family and having enough money to enjoy your life at the same time.
Don't let that get in the way of starting to save - over the years even seemingly small amounts set aside regularly can build into respectable nest eggs.
Here is my five-step plan:
- Identify your goals and prioritise them.
- Create a budget or "profit and loss account" by comparing your income against your expenditure. Also set out your assets and investments against your liabilities - such as your mortgage.
- Analyse how far your present financial situation is from your aspirations and what actions you might need to take.
- Take action by investing an amount that you can afford - above all make sure that there are no hidden surprises in your plan. Consider how tax planning and tax efficient investment can help improve your returns and reduce your tax bill - but never invest purely for the sake of obtaining tax relief.
- Review your progress. You may not have a lot of money to spare but regular contributions - even very modest amounts of money - can grow into a tidy sum in the future. And getting into the savings habit is a good discipline. You may then find in the future that you can afford to save more.
As a starting point, consider this: If you invested £100 a month in an ISA it could be worth £16,275 in 10 years, assuming 6% growth after charges.
