When you receive an inheritance or significant financial gains from your investments, the goal is to effectively manage this wealth corpus to safeguard your financial health. Wealth management helps you achieve this goal in a systematic way.
Undertaking wealth management is essentially planning for tomorrow. From managing complex tax scenarios, ownership titles, and multiple income sources to juggling an extensive investment portfolio and planning for contingencies, wealth management covers all the bases to protect your financial health holistically.
This article covers why you need wealth management to protect your financial health in detail.
Just as filters are a critical part of streamlining searches on any online marketplace, similarly wealth management is a critical component of your financial well-being. Here are a few reasons why wealth management is crucial for your financial health:
Wealth management helps you achieve your set financial goals in a timely manner. Drafting a detailed wealth management plan that’s based on your distinctive requirements and goals helps draft effective strategies to grow and preserve your wealth.
Moreover, it also helps you monitor the progress of your investments to ensure that you are inline to achieve your goals. In fact, a comprehensive wealth management plan also helps you revise steps in your roadmap to suit major life events like marriage, divorce, or the birth of a child. In other words, wealth management helps you keep a track of your overall financial health.
Financial distress can compromise your well-being and jeopardise your financial health. Having a wealth management plan in place can make it significantly easier to make financial decisions. For instance, partnering with professionally qualified advisors can assist you in navigating volatile market conditions and selecting assets for investment.
Your wealth management advisor can help you understand how to allocate funds in a turbulent market - for instance, whether you invest in stocks or opt for safer investments like NBFC FDs. Financial distress is minimal since you defer to the advice and judgement of trained and experienced professionals to manage your funds and make investment decisions.
Wealth management plans also include contingency planning to take care of any unexpected emergencies without resulting in financial distress.
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Incorporating wealth management into your financial planning checklist allows you to benefit from personalised approach to investment, retirement planning, taxes, and more.
Wealth managers can use their knowledge and expertise to create customised financial strategies rooted in your personal financial goals, risk tolerance preferences, and circumstances. For instance, wealth managers can help plan asset transfers and inheritances. Depending on the
size of your estate, number of beneficiaries, your specific asset distribution instructions, and the taxation landscape, they can advice on appropriate estate planning tools - be it wills or trusts.
Wealth management is critical for your financial health because astute management strategies can help you lower your tax burden. Effective taxation strategies help you preserve your wealth, instead of draining it through tax payments.
Wealth management is aimed at tax optimisation where managers work closely with tax professionals to ideate strategies that help enhance your post-tax returns.
They explore various tax-saving strategies like utilising tax-efficient investment vehicles, capitalising on deductions, utilising capital loss to offset gains, channeling charitable donation deductions, and more to ensure tax compliance but also simultaneously reduce your payment burdens. Therefore, wealth management is essential to enhance your post-tax income.
Wealth management helps you protect your financial well-being in the present as well as the future. The practice of wealth management is geared towards long-term goals, including ensuring financial security for your family. Wealth managers help you draft estate and legacy plans that secure the future of your dependents in your absences.
They also recommend life, disability, and health insurance covers to protect the wealth corpus you have accumulated and ensure that it is passed on to your beneficiaries in the most tax-efficient way.
Conclusion
Wealth management is designed to protect and preserve your wealth while growing it. It is focused on managing your wealth in the most tax-efficient way to safeguard your financial future and protect the fiscal needs of your dependents. From keeping track of your goals to ensuring proper estate planning and tax planning, wealth management remains a key component for ensuring good financial health.