The upsides of building wealth slowly

The upsides of building wealth slowly

Maybe it’s a stage in life that you get to, when eventually you recognise that building wealth for most people is a pursuit that happens over many years, indeed decades. And most importantly, that it’s perfectly acceptable to build wealth slowly.

Certainly when we’re much younger – in our teens and twenties – the idea of quick riches is very alluring. The constant barrage of people on TikTok and Instagram who have “made it” at a very young age can drive heightened levels of envy. If they can do it, why can’t I?

But as we get older, we start to understand that for every successful and overpaid sports star and celebrity, thousands have been unsuccessful in their pursuit of riches by this route. That’s not to say that talented people shouldn’t have dreams and go for it, and ultimately be well rewarded. Because good luck to them! But it’s a very tough road on which many people flounder.

And then we see lots of incredibly wealthy people who made their riches by building up and eventually selling some or all of their businesses. Again, these people should only be applauded, as they may well have taken an idea, not listened to the naysayers and then put their heart and soul into building their successful enterprise. Well done to them, they deserve everything that they have achieved.

And then there are the others, who hit lucky. They got in (and out) of some risky asset class at just the right times and made their fortune that way. Of course, in their eyes, there was no luck involved – it was all down to their savvy investment decisions. We know that for every one person who timed markets perfectly, there are so many more who got it very badly wrong.

But the likelihood is, all of these people paid a price in some way along the road to success. The price may have been the significant time spent in a laser like fashion in their pursuit of success. Or indeed the significant risks they took along the way by being exposed to a single asset.

There is another way.

The alternative is – to build your wealth up slowly. While you may not get the opportunity to tell the world about your exceptional talent or investment wisdom, there are many upsides to it.

People who build their riches through sporting achievements or indeed building businesses use enormous amounts of one of life’s most precious resources in doing so – their time. Building your wealth slowly through structured financial planning and wise investment decisions does not use lots of time, leaving it available for you to use as you want. You may be replacing the road to quick riches with time spent with your family, being home in the evenings to eat dinner with the kids and getting to support them at those precious football matches.

We’ll also never leave you sitting there, sweating about the prospects of some investment bet that you took. Because we’ll never suggest you take the roulette approach and invest all your money on a single share or some volatile asset class. You might not get rich overnight, that will take more time. But your family will always be secure, irrespective of how markets perform. We think you should celebrate these facts, spending time living your life to the full and never putting it all at risk.

Hats off to the successful people. But hats off too to those people who took the alternative path of living life to the full. There’s a lot to be said for being driven by the life you want and not the public acclaim of riches.

Separation - reduce the financial turmoil

Ending a marriage is usually a really tough time. There are big decisions to make about who gets to take care of the kids, how often each parent gets to see them, and where everyone's going to live. Often, things get pretty tense between the ex-partners.

Then comes the tricky part: figuring out who gets what stuff, how much money one person needs to give the other for support, and how to pay off any debts. It's really helpful to have a financial planner involved because they can handle all of this without getting caught up in the emotions. Our main goal is to make sure you come out of this with the best possible outcome regarding money matters. So, here are some areas to think about, and where we can lend a hand.

We’ll leave the emotion at the door

Believe it or not, we're just as emotional as anyone else, but when it comes to handling our clients' money, we switch gears completely. During the intense period at the breakup of a marriage, it's incredibly helpful to have someone who can set aside emotions and focus solely on the financial side of things. Sometimes, we might suggest solutions like selling the family home to buy two smaller ones, even though it's tough for both parties to agree this on their own. Remember, equitable doesn't necessarily mean equal. Factors like who primarily uses the asset or who might need it more (for example, a primary caregiver might need the family car) should be considered.

As part of this, don't forget to take care of your emotional and mental well-being and encourage your ex to do so too. This isn’t directly a financial tip, but stress can lead to impulsive or poor financial decisions. Consider counselling or support groups, and ensure you have a personal support network to lean on. Having voices of reason around you can save a lot of time, expense and additional heartache. 

Keep lines of communication open

Emotions tend to run high during a separation. However, open and honest communication about finances is essential for both parties to achieve the optimal solution. Do your best to leave “one upmanship” outside the room, and instead focus on the current situation and how to handle joint responsibilities and assets.

Keep the kids front and centre

It might seem like putting the kids first should be a no-brainer, and for the most part, it is for many couples going through a separation. But sometimes, people get so focused on getting what's best for themselves that they forget about what's important. If you have kids, it's crucial to make sure their needs come first. That could mean setting aside money for their schooling or making sure they have a stable place to live. And remember, child support isn't about punishing or rewarding anyone — it's just about making sure the kids are taken care of.

Understand the financial products needed in the future

When you're going through a separation, it's important to make sure you have the right life insurance in place to secure maintenance payments if one partner passes away. Get advice on what type of policy to choose and who should receive the benefits, so you can minimise any Capital Acquisitions Tax liabilities on receipt of the benefits.

If you're receiving maintenance payments, it's also crucial to make sure your ex-partner has enough income protection in case they can't work due to illness or injury. And don't forget to keep your health insurance coverage in place, as letting it lapse can lead to higher costs or less coverage later on.

Dealing with pensions can be really tricky, especially during a divorce. A Pension Adjustment Order (PAO) allows you to get a share of your ex-partner's pension fund, but there are different ways to set this up. You can either keep the benefits in the pension scheme until your ex-partner retires, or you can transfer your share to your own pension arrangement. We'll help you figure out the best approach for your situation.

Be realistic about household expenses

It's crucial to get real about your household expenses when you're going through a separation, especially if you and your ex didn't pay much attention to spending before. If you're going to be receiving maintenance payments later on, you need to really understand how much it takes to run your family. This means keeping a close eye on your monthly spending and also considering any big expenses that come up throughout the year—things like car costs, school fees, holidays, club memberships, and insurance. These expenses can really add up, and we can help you figure them all out.

But here's the tough part: we can't make them disappear. Going forward, you might have to support two households with just one income, which often means making some sacrifices.

A separation is never going to be easy, particularly in an emotional context. But by focusing on the practicalities and ensuring decisions are equitable and fair, both parties can transition to their next life chapter with greater security and peace of mind.

How to improve your financial mindset

The most famous of all investors, Warren Buffett once said, “People seeking riches never have enough. Wealth is a state of mind. Wealthy people always have enough.” To him, riches are a monetary amount and never satisfy you. On the other hand, wealth is a journey and a set of actions that lead to a more fulfilled life.

So, as we try to apply this to our own finances, we’ve identified a set of principles of actions for you to consider, to help you build wealth in a fulfilling way, as opposed to just seeking to grow your bank balance.

Have a “Why”

Start by identifying and being able to articulate why you want to grow your wealth. Is it because you want the security and comfort of being debt free by the age of 50, or maybe you want a certain lifestyle in retirement – being able to live in a warmer climate for 3-4 months of the year? These are real life goals, as opposed to a meaningless number of Euros in your bank account…

Know how much is Enough

Some people end up living fairly unfilled lives, judging their success or otherwise by comparing their riches to their siblings / friends / anyone, or by aiming for a random bank balance. And what happens when they achieve that figure? They get back on the treadmill and seek a higher number, dissatisfied unless they achieve that.

On the other hand, some other people decide on their goals in life, and with the help of a financial planner, thy identify how much they need to fulfil those goals. And when they achieve them, they enjoy them, living the life they want in a fulfilled and satisfied state of mind.

Pay yourself first

You’ve likely heard us talk about this one before! That’s because we believe it is the key to successful saving. Let’s assume you’re paid on the first day of each month. Lots of people pay their bills, live their life, and look to save whatever is left over at the end of them month. And yes, they usually get to the end of the month with a zero bank balance, as their lifestyle consumed the available cash. 

On the other hand, astute savers identify their target saving amount and have this set up to automatically transfer to another account on the second day of the month. And they then live their life in line with the available funds in their current account. Of course, from time to time, they may have insufficient funds to see them through the month, and need to dip into their savings. But at least now, they have savings to dip into…

Recognise there’s no short cut to being wealthy

Building wealth is a long-term pursuit, achieved by lots of wise actions practiced over many years. The greatest destroyer of wealth is our own behaviours, that typically are the result of having short-term blinkers on. Acting on a hot stock tip or having a hunch that markets are at the top or the bottom, and selling or buying on this basis are usually routes to wealth destruction.

Instead, wealth creation will happen by consistently investing, and then letting time and compound interest get to work without meddling in the process.

Listen wisely… and with scepticism

Surround yourself with the right people. First of all, avoid being swayed by the latest ramblings of some so-called financial expert who is giving you a sure-fire way to investment success. It doesn’t exist… because if it did, he/she would keep it to themselves!

Likewise, be careful of listening to family or friends who come from the YOLO school of thinking – You Only Live Once! These people live life by the seat of their pants, and while they may enjoy some fun in the short-term, this usually turns out to be an uncomfortable place to be in the long-term.

Instead that friend who mentioned saving money in their teens and pensions in their 20’s is not boring! They have probably turned out be the wealthy people, living a financially stress-free life and having clarity about the life they want to lead… as they are on course to achieve it.

Our overriding advice? Think what wealth is to you – what does it mean in terms of the life that you will live. And then aim to achieve that, as opposed to a meaningless bank balance.