Personal Finance Software

Managing Your Own Money is the Only Way
to Build Wealth

No matter our gender, creed or color we all want financial security.  It might cross our minds briefly in our youth but when we reach the end of our 20’s, most of us are thinking about building our wealth.  We’re thinking about the life we’d like to have and our financial security when we retire.  So we dutifully sock away money in retirement accounts and hand other sums over to investment firms, hoping against hope the market cooperates and the risk will be worth it.

Lately, those of us with investment accounts aren’t too happy with them; some of us have lost half of our assets thanks to a poor economy.  We’re unhappy with our funds managers, who keep advising us to hang on and it’ll all come back to us.  But will it? 

The only sure way to build wealth is to take it out of the hands of the “experts” and to become an expert yourself.  After all, who has more motivation that you do to make sure your money grows?  Sure, you’ve been told that your investment manager has huge incentives to make your money grow because the more your make, the more he or she makes.  But is that really true?

The average financial consultant hires outside firms to make trades.  You may think that your consultant has your interests at heart but he is too busy building up his client base to care about your money.  While he is trolling for more clients, the people he has hired to handle your money are completely dispassionate about it—they are doing their job and you are one of tens of thousands of people whose assets they handle. 

Even if you find a great consultant that starts giving you great returns, you probably don’t understand what’s going on with your money.  Many people don’t even know the right questions to ask or the right documents to examine to be sure you’re dealing with a reputable firm.  Remember the supposedly smart people bilked by Bernard Madoff and other financial scammers?

If you want to build wealth and insure financial security now and in the future you need to learn to manage your own money.  Warren Buffet is so wealthy because he is a hands-on money manager, trusting his knowledge and instincts to increase his own wealth.  He knows the market, has taken time to learn how to spot a trend and knows how to read a prospectus.  Mr. Buffet makes great decisions because he’s taken the time to learn how to manage his own money and grow his wealth.

For the average person to grow their money enough for a comfortable retirement or a more upscale lifestyle they would need a return of 15-25% every single year.  The average portfolio earns 6-10% with a “good” manager.  At the average rate, it would take 9 years to double your money and twice that to quadruple it. 

If you start with $250,000 at age 45-which is the average age these days that people begin to seriously save for retirement-you’ll have a million dollars when you’re 63 years old, two years from standard retirement.  That sounds like a lot but it’s not much when you consider that a person who lives till age 65 has a 60% chance of living to the ripe old age of 90.  You are not building wealth, merely preserving it.

When you manage your own money you can expect returns of up to 25% or more, a rate that will build real wealth.  All it takes is a little education, some common sense and a real drive to take responsibility for your own money.  Then you’ll be on your way to financial independence.

Author James Vignione, administrator of Orion Systems specializes in free personal finance software, calculators, and financial information to help people manage and organize their finances more efficiently.

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