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Why Build Wealth And Achieve Financial Independence

02 Aug, 2020
  • Written By: Matthew Mani

What is wealth? Real wealth consists of equipment and software, privately held real estate, intellectual property, net international assets, land, roads, public infrastructure etc. As you would notice, most of the wealth is really held by companies, which are better placed than individuals to deploy wealth so as to generate income in the long-term. To have a share of the national wealth, most people have to do so indirectly through a financial claim on those assets by owning shares in the companies or buying corporate and government bonds. This concept gave birth to financial assets, which is a way for the masses to take part in the national wealth.

It has been long established by economic thinkers that savings and investment are the foundations of economic growth and development. Adam Smith assumed this in his work “the wealth of nations”.Robert Marshal Bennin, CFA, Chairman of Axis Pension Plan (the de facto leader in Personal Pensions in Ghana), as part of his report at a recent annual open forum stated, “no one can build wealth without consistently investing over a long time”.

 

So, why should you strive to build wealth? Below are some reasons why. The wealth an individual or family possesses helps:

A. Send kids to school

How far one is able to advance in education is dependent on family wealth. I know of brilliant individuals who got scholarship to schools but could not afford the transport and clothing required to report to school. The quality of education one gets and the classmates one makes are by far a strong determinant of social mobility and economic opportunity. Just think Harvard, Stanford, Oxford, etc. One will often have to pay some top fees for the opportunity to attend such schools even though your GMAT scores may be pretty good.

B. Launch small businesses

You cannot launch a business without some form of capital of yourself. How can you build capital without consistent savings and investment? Your access to credit from the banking system will depend on your wealth or ability to provide collateral of some form. It will be much easier to prove to a bank you can repay your loan if you show an investment statement. Top it up with the reality that those from wealthy families are more confident to launch more businesses because if they fail, they have some wealth bringing them income to depend on.

C. Survive unexpected challenges

No matter how well we plan for our lives, we will still have to deal with catastrophic events like covid-19 pandemic, death of key family members, divorce, lawsuit, natural disasters etc. These unexpected events can sometimes force you to rebuild your entire life again from scratch. For many people, their only strategy is to rely on their church or family and friends to cope in such situations. Relying on charity can take you a very long time to recover. Take note your goal is to have financial ability to rebuild and recover speedily or to weather the storm with minimal alterations to your life and lives of those who depend on you.

Many people did not have enough savings to survive for 3 weeks during the recent covid-19 lockdown. Businesses in the most hit sectors who did not maintain enough retained earnings in prosperous years had to implement layoffs, cutting off career hopes of some workers. Compound this with the fact that some of the workers have no personal pension investments but rather had bank loans demanding on going repayment.

Jeff Bezos is still the top billionaire despite going through divorce. He could afford the best lawyers who negotiated much more reasonable terms of divorce. Some other people would have been completely devastated. The rich man’s wealth is his strong city indeed. Make a decision to improve your future financial opportunities by starting to build savings and investments. Open a Personal Pension plan account today, this is no joke my friend.

D. Stabilizes loss of income and consumption smoothening

Life is in cycles. In some years, many people earn more money than they would need to consume and other years they don’t earn enough to survive. One such period where income could be lost is retirement or permanent disability. But if wealth has been acquired during the high earning years through investments, then they could live off the income stream from those investment assets without significantly reducing their life style.

E. Increased capacity for helping others.

Culturally, funerals are a big thing in Ghana, as in many parts of Africa. Wealth can give you the power to organize a befitting funeral for your parents. For those who have had the opportunity to see your parents in their final years, having the financial means to assist them till death can be deeply satisfying. Wealth also gives you the ability to fund community events and public infrastructure that keep people together and strengthen cultural values e.g. a chapel, community center, school block etc.

Let me leave you with some questions to ponder about. When a rainstorm hits your village and NADMO is unable to send relief in time, how many blankets and medicines can you organize to support your village? Do you have the means to buy roofing sheets to re-roof your family home? Could you buy some nose masks for your home town or church during the covid-19 outbreak?

F. Live happier life

Wealth allows you live the type of life style you really want for you and your family without financial stress. I have heard that money does not bring happiness, but how happier is someone who cannot afford to do what they truly believe in or assist people they truly care about?

 

The list is endless and you can do some or all of the above someday by investing consistently over a long time. Open an Axis Pension Plan investment account today or contact any mutual fund provider and start right away. Now that you have some financial goals to start saving towards, start by taking actions today that will ensure you are financially “lucky” in future. George Clason, in the Richest Man in Babylon was quoted as saying, “men of action are favored by the goddess of good luck”.

 

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Axis Pension Trust partners workers throughout their retirement planning journey to ensure they are on track to achieve a dignified retirement. For more information on our services or general enquiries, send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. or call 030 273 8555.

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2 comments

  • Comment Link Ferdinand Dsane Friday, 07 August 2020 13:38 posted by Ferdinand Dsane

    Excellent piece. Very insightful

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  • Comment Link Humphrey Osei Thursday, 06 August 2020 15:30 posted by Humphrey Osei

    A happy person is a healthy person. The lis is indeed endless but I sure would want to live a happier life. Good read!

    Report

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