When thinking about high net-worth individuals, there's a tendency to view them as people without problems, living a life of luxury. Because they've been able to amass a significant amount of wealth over time, they're set for life - or so the thinking goes.

In fact, having a high degree of wealth is far from a care-free status. Owning wealth means needing to take care of it, whether through implementing tax planning, setting up an orderly estate or creating a successful investment plan. This might explain the soaring importance of wealth management.

Wealth management isn't simply about making financial plans for your future, however. At its most basic, wealth management is a matter of realizing your priorities like….

Lifestyle maintenance –

Your most important planning objective is to maintain your current lifestyle and ensure your financial independence. One of the major obstacles to effective planning is the gap between the perception of wealth and reality of wealth. Thus, you should clearly define what is required to maintain your current lifestyle. In other words, the annual income needed for personal consumption and material assets (house, car, vacation home) to maintain your lifestyle and adequate liquidity.

Wealth transfer to heirs –

Most likely, you want your heirs to be safe and comfortable, to help them become established and successful in life, and to provide for their medical or housing needs if they meet unexpected emergencies. In addition, you want your children and grandchildren to exhibit character, mental strength, integrity, a sense of family legacy, and responsible behavior – attributes money can’t “buy.” In short, you want your heirs to be self-supporting, but would like to provide both selected advantages and a “safety net.” Only you can decide how much is enough to leave your heirs. Many couples discover that if they do nothing, they will leave their children much more than they really believe is necessary or appropriate. Defining an appropriate specific inheritance requires careful consideration of each individual heir. What is appropriate for one is not necessarily appropriate for another. Your job is to identify specific assets or lifestyle attributes you would like your heirs to enjoy as a result of receiving an inheritance.

One can approach mainly Boutique Advisory Firm, Banks or Brokerage House to avail “Wealth Management Services”. They may offer you these services free of cost or can charge you annually, depending upon their respective business model.

It's not enough to simply save a lot of money -- if you want your savings to outpace inflation and grow into a nest egg, you have to invest. Here are a few rules for successful investing!

Know Your Risk Tolerance:- Usually measured by a risk profile questionnaire, risk tolerance is a gauge or estimate of how much risk or volatility an investor can take.

Have a Clear Investment Objective (Goal Setting): - What is the purpose of your money? What do you want it to do for you? How much time do you have until you need this money? How much risk are you willing to take to achieve above-average returns?   Goal setting is the most fundamental step in the wealth creation process – when you have a specific goal, the rest of the financial planning process falls into place.

Keep Investing Simple:- Simplicity is among the greatest and most valuable investing virtues. Countless studies have shown how a diversified portfolio of low-cost mutual funds can outperform professional fund managers over long periods of time.

Diversify your investments:- Diversification in the financial equivalent of the saying “Don’t put all your eggs in one basket”. When it comes to investing, putting your eggs in one basket is the equivalent of putting all of your savings into just one stock, mutual fund or non-diversified investment type. And this is not generally a good idea because it increases market risk.

Don't Time the Market:- For most investors, time in the market beats timing the market. Not even the most experienced fund manager knows what will happen next in the stock market or economy and even the best of investors can have dramatic declines in account value when trying to time the market. Therefore the long-term approach is best and a good way to take advantage of the market's ups and downs is to rupee-cost average into your investments, which means you buy consistently on a periodic basis, such as once per month.  

Good debt & bad debt:- While debt can sometimes be viewed in a negative light, it can be an effective way to increase your net wealth if used for the right purposes and in the right way.

Do your homework before you invest:- You work hard for your money, and buying and selling investments costs you money. Never buy an investment based on an advertisement or a salesperson’s solicitation of you.

Hire advisors carefully:- Before you hire investing help, first educate yourself so you can better evaluate the competence of those you may hire.

More and more people are opting for the DIY approach because of easy access to financial information, online brokers/fintech, and increasing awareness of financial products.

Whether you do it yourself or hire an advisor, remember that the most expensive advice is free advice. Investing is one of the areas of personal finance that has attracted more do-it-yourselfers than any other area of financial planning.

One might have done a good job of building a portfolio of mutual funds but your overall returns suffer because you failed to place tax-efficient funds/schemes. Or you've done a great job of saving for retirement but a major economic recession/pandemic strikes a few years prior to retirement and it derails your plans.

Certainly, there are many wonderful tools and information sources available online for investors to make wise decisions about investing. Also, many fintech companies make it easier than ever for investors to research, make decisions and implement savings and investment goals.

However, more choice often leads to lesser ability to make good decisions and investors can make the classic mistake of spending too much precious time on money when they could be spending it on higher priorities, such as family, health, or personal goals.

The old proverb, "The only person you can trust is you," is wise. However, choosing an advisor is something that only you can do for yourself. Here are some things to look for when selecting a financial advisor:

• Do they offer a full range of planning or do they simply sell a product?
• Do they include tax planning in their advice?
• Do they have a thoughtful approach to investing, or do they just drop their clients into template programs set up by their company?

Many investors mistakenly base the success of their portfolios on returns alone. Few consider the risk that they took to achieve those returns. Earlier Investors have known how to quantify and measure risk with the variability of returns, but no single measure actually looked at risk and return together.

The portfolio performance evaluation involves the determination of how a managed portfolio has performed relative to some comparison benchmark. Performance evaluation methods generally fall into two categories, namely conventional and risk-adjusted methods. The most widely used conventional methods include benchmark comparison and style comparison. The risk-adjusted methods adjust returns in order to take account of differences in risk levels between the managed portfolio and the benchmark portfolio.

The risk-adjusted methods are preferred to the conventional methods.

The evaluation of portfolio performance is important for several reasons. First, the investor, whose funds have been invested in the portfolio, needs to know the relative performance of the portfolio. The performance review must generate and provide information that will help the investor to assess any need for rebalancing of his investments.  

Although portfolio evaluation is the last step in the portfolio management process, it is by no means the least important. On the contrary, proper performance measurement, attribution, and appraisal can enhance the probability of success for the entire investment process.  

COVID-19 is not the first crisis we have endured, and it will likely not be the last. While we have not experienced the particular pain points of this virus all at one time before—like schools shutting down, grocery stores running low on items, layoffs, and significant pay cuts. Undeniably, things are uncontrollable on all fronts, while adjusting with the new normal is what we have control over right now.

The pandemic is changing the way people think about money. Despite the uncertainty of how the pandemic will affect your financial planning in the long term, there are steps you can take to build financial security for yourself and your family.

Emergency Saving:

One should always have at least 3 to 6 months living expenses in emergency funds. Times like these illustrate why cash is king during emotional uncertainty.

Don't Stop Investments:

Contribute more to your investment rather than selling it in panic. Or because of it's low valuations, start doubting your own strategy. Historically, we have seen the market always bounce back eventually.

Insurance Planning:

Do make sure you have the appropriate amount of Medical Insurance, Critical Illness plan, and Life Insurance cover. These policies are very critical for your financial planning.

Rebuild your Debt strategy:

Do a makeover of all the high-interest loans, like outstanding on a credit card. You can do a balance transfer towards a lower interest rate instrument.

Monthly Budget Makeover:

You can cut down unnecessary expenses. This can help you conserve more cash.

You can get in touch with me to know more about financial planning, wealth management, and Insurance Planning.