PERSPECTIVE: Investing to Build Your Wealth Portfolio

By Konnect Initiatives Limited Investment Team

Investing is about building a portfolio of assets that bring in cash regularly.

It is often said that money does not make you wealthy, but it is your assets (investments) that make you wealthy.

But it is also true that those with huge sums of money are likely to earn bigger and better returns on their investments and as their investment portfolios grow, they are likely to attract even better investments and managers, so their finances keep getting better.

While those with little, the little will most likely be eaten up by inflation and other wealth destroying mechanisms.

But this should not be a source of gloom. All you need is an advantage, however small, to kickstart the process of creating and growing your own wealth portfolio. A simple ingredient to wealth building that is often overlooked is the fact that like saving, investment has little to do with the amount of money one earns, and has a lot to do with your discipline.

It’s a divine principle of life that for whatever we sow, that we shall reap. You can’t get out of life what you are not willing to invest into it.

For example, if you want a happy life or marriage, you need to work at building it. Likewise, if you desire wealth, then you must invest in building a portfolio of assets. You can start by converting your current earnings into income generating assets through the investments you make.

While we have no control over returns, our discipline and consistency can help mitigate the uncertainty of life, since this is part of the wealth building equation that is within your control. In the greater scheme of things, wealth is simply the accumulated balance after you spend what you take in.

Which means that anybody can build wealth even with a low income, but one has no chance of building wealth if you lack the discipline of consistently saving part of the value that you create or earn.

So while saving is an important prerequisite for building wealth, it is not sufficient. You need to put your savings to work by converting them into assets (investments) that produce cash.

An investment is defined by its ability to generate cash flows. Simply stated, the value of any investment is the sum of all the money it will make in future. For an investment to be valuable it must grow and endure. In order to make your money work for you, be deliberate about your financial health and do not leave it chance. Build a portfolio of assets to earn you multiple income streams and ensure a healthy cash flow.

Making regular scheduled investments is one of the best ways to create wealth and achieve your financial goals. Commit to regularly investing even if you are investing small sums of money. Small sums will compound your wealth over time.

Investing is like planting a big tree, they both require patience. In the immediate short run, you may not see much progress, but in the long run you will see the extraordinary power of compounding. Most sensible investment assets will be effective when given enough time.

Just like small expenses become big expenses over time, small amounts invested regularly become large investments over time.

What matters is picking the kind of investments that suit your needs and disposition as well as your financial ambitions and goals! Then let the investments work hard for you as you enjoy the returns.