Maximizing Lifetime Wealth

Many of us spend (ha ha...) countless hours trying to figure out how to maximize our personal lifetime wealth... Here are some ideas to ponder...

First of all, maximizing personal lifetime wealth will require that one maximize savings and minimize current consumption – because of the power of compounding, the more we set aside for investing early on in life, the greater the probability that these savings will grow into a substantial nest egg. In addition, it’s a matter of simple math – the more we will have available to invest, the greater our potential returns will be.

The second most important thing we must do is to invest these savings strategically. Such investments must be well-diversified in order to minimize losses, and the level of risk undertaken must be commensurate with our investor-type. This may of course impact the potential to maximize returns as a more conservative investment approach will, necessarily, reduce returns and vice versa.

Third, we must rebalance our investment portfolio, at the very least on an annual basis, in order to maintain a consistent investment strategy and an appropriate level of diversification.

Fourth, one should only invest in assets one understands, following substantial research that should invoke both fundamental and technical analysis techniques as well as a perusal of analysts’ opinions.

Investing according to the above guidelines should get you on your way towards maximizing your personal lifetime wealth.

Have other ideas? Share them. Comment.

Raging Academic