Ifeoluwa Adegoke is a certified financial education instructor, and capital market and security analyst. In this Interview with JOSEPHINE OKOJIE, she spoke on the steps in wealth building and the role of tech in financial planning. Excerpts:
What is the first step to building wealth?
The first step to building wealth is to start saving and investing your money wisely. This means living within your means and creating a budget that allows you to save a portion of your income monthly. In addition to saving and investing, building wealth also requires a long-term mindset and the discipline to stick to your financial plan even in the face of uncertainties and challenges. Over time, the power of compound interest and the growth of your investments can help you build wealth and achieve your financial goals.
How can technology make financial planning easier and more effective?
Automation is one way that technology is making financial planning easier and more effective. Financial tasks, such as saving and investing can be automated using different fintech apps. This helps to save time and ensure that financial goals are being met even when you’re busy or don’t have time to monitor your accounts regularly. Thanks to technology, I save a fixed amount automatically every month without having to think much about it.
Can debt ruin one’s chances of attaining wealth?
Debt can hinder one’s chances of attaining wealth, but it doesn’t necessarily mean that it is impossible. Bad debt -especially high-interest debt like the common instant loans we see nowadays, can make it harder to save and invest money because you’re using your income to pay off debt and high-interest charges. Debt can also lead to financial stress and anxiety, which can impact your ability to make clear, rational decisions about your finances. However, debt can be used as good leverage to build wealth if used strategically but bad debt especially when used to fund a lifestyle often leads to more financial difficulty.
Is it vital to have multiple streams of income before one can be termed financially free?
Having multiple streams of income can certainly help you become financially free, but it’s not necessarily a requirement. Being financially free means having enough passive income or assets to cover your living expenses without having to work actively for a paycheck. There are many different paths to achieving financial freedom, and having multiple streams of income is just one approach. Some people may achieve financial freedom by building a successful career or business, while others may achieve it through smart investing or real estate investments. However, having multiple streams of income can provide some important benefits that can help you achieve financial freedom faster, such as diversification, increased income potential, and financial security.
Is having a strategy key while making investment decisions?
Yes, having a strategy is key while making investment decisions. Investing without a strategy is like driving a car without a destination in mind – you may end up going nowhere or worse, end up in the wrong place. A well-defined investment strategy can help you achieve your financial goals, effectively manage your risk, track your progress and avoid making emotional or impulsive investment decisions. Investing haphazardly is like trying to hit a target blindfolded, it leads to nothing but a waste of time and resources. Overall, having a well-defined investment strategy can help you make more informed investment decisions and significantly increase your chances of achieving your long-term financial goals.
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What is the place of risk in wealth acquisition?
Risk is an essential component of wealth acquisition. Most wealth-building strategies involve some degree of risk-taking, and there is typically a trade-off between risk and potential reward. The greater the risk, the greater the potential reward, but also the greater the potential for loss. Taking calculated risks is often necessary to build wealth, but it is important to understand the risks associated with different strategies and to balance risk and reward in a way that aligns with your financial goals and risk appetite.
What practical steps can one implement to put an end to procrastination in financial planning?
The best way to curb procrastination is to work with a financial planner that will hold you accountable. It can be daunting to try to figure out all the moving parts of wealth building like saving consistently, investing in the right opportunities, managing risk, protecting your wealth and planning for emergencies. I believe choosing to work with a financial planner you trust can help put an end to procrastination.
Is budgeting relevant to creating wealth? If yes, how?
Yes, budgeting is highly relevant to creating wealth. By creating a budget, you can track your income and expenses, and identify areas where you can cut back on spending when necessary. This can help you control your expenses and reduce unnecessary spending, freeing up more money to save and invest. It can help you plan for future expenses, such as buying a home or starting a business, by setting aside money and planning for those expenses in advance, which can help you avoid taking on debt and achieve your goals more quickly.
Can having a plan help reduce the financial burden?
Yes! I like to call financial planning the ultimate cure for all money-related anxiety and stress. I say this because financial planning takes into account every single thing going on in your finances and helps you navigate how to change the part that is not satisfactory.
How can investors ensure maximum profit in the era of inflation?
Investors can potentially maximize profit during an inflationary period by diversifying their portfolio, considering inflation-protected investments, investing in growth stocks, investing in real estate, monitoring and adjusting their portfolio, and seeking professional advice. Inflation is not static, and it can vary over time. It is important to monitor inflation and make adjustments to your portfolio as necessary to ensure it remains aligned with your goals and risk tolerance. By taking a proactive approach to invest, investors can potentially mitigate the impact of inflation and still achieve their financial goals.
How important is a saving culture in achieving wealth?
Having a saving culture is crucial to achieving wealth. Saving is the act of setting aside a portion of your income for future use, and it is an essential habit that can help you build wealth over time. One of the primary reasons why saving is important is that it allows you to create a financial safety net that can help you weather unexpected expenses or financial emergencies. When you have savings, you’re less likely to be caught off guard by unexpected expenses like a medical emergency, car repairs, or a sudden job loss, which can help you avoid falling into debt and negatively impacting your long-term financial health. It is also crucial to investing, as it provides the funds that you need to invest in assets like stocks, bonds, or real estate. By investing your savings, you can earn a return on your investment that can help you grow your wealth over time.
