The problem with managing our wealth without support: people often can’t distinguish between real needs and perceived needs. For example, most high net worth individuals spend a lot of time multiplying their wealth – this is a perceived need. The real need should be to preserve our wealth so that our family can continue to enjoy the same lifestyle for a long time. Failing to address this issue effectively poses a risk that can wipe out our accumulated wealth overnight. Most people like to think that these unfortunate events will not happen to them or will only happen to other people.
In the absence of professional wealth management support, people tend to commit these common wealth management mistakes:
Procrastination
We put off taking important wealth management actions. Wealth distribution planning and financial security take a backseat.
Our blind spot: we think that it is still too early to plan; taking action now is unnecessary.
Failing to prioritize our financial objectives
We are always thinking about which financial goal is more crucial to our family. “Should I continue multiplying my wealth or start preserving it?”
Our blind spot: we act according to our existing values and emotions, not what is needed.
Failing to balance our investment portfolio
People prefer certain classes of investment due to their previous investment experience and their comfort and knowledge level. For example, some people may be so familiar with real estate that property investments make up more than 80% of their portfolio. Thrill seekers who enjoy the roller-coaster stock market may end up with more than 90% of their portfolio in equities.
Our blind spot: Putting all our eggs in one basket. It’s not uncommon to see most property developers holding more than enough properties. On another end, there are listed company owners who hold more than 80% of their portfolio in equities (or their own stock).
To effectively manage our wealth, be mindful of our blind spots. Take action to address it before it’s too late.
