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It’s interesting to note that many of the known cases of lottery winners have ended in tears and bankruptcy, with the tale of Michael Carroll offering a relevant case in point.
Incredibly, Carroll won more than £8 million from a single, £1 ticket, despite not having a bank account at the time. However, Carroll lacked the maturity or financial education to manage his suddenly acquired wealth, ultimately declaring himself bankrupt just a few years later.
With an understanding of finance or a focus on expert investment management, wealth can be eradicated quickly, particularly at a time when the cost of living remains markedly higher than earnings.
In this post, we’ll explore the importance of saving and investing, while offering some insight in terms of how you can maintain your wealth.
Saving and investing are different concepts, with the former describing the process of hoarding capital in dedicated bank accounts and accruing a nominal rate of interest in the process.
Conversely, investing is a much higher risk endeavour, and one that typically incurs potential losses but looks to generate higher returns over an extended period of time.
Risk is arguably the single biggest differentiator between saving and investing, although both can play a key role in helping your accumulate wealth. When combined, for example, they enable you to build a diversified portfolio of assets that minimise your exposure to risk and optimise your returns within any given timeframe.
Ultimately, saving and investment can combine to create lucrative and passive sources of income, which can augment your existing earnings and maximise your ability to make money and accumulate wealth towards your future.
This is particular important in the current economic climate, with the UK having seen inflation peak above 11% in October while earnings continue to stagnate and a recession threatens to cause a spike in unemployment.
Interestingly, the techniques used to preserve wealth or accumulate slowly over time are diametrically opposed to those that help you build it quickly. These include:
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