5 Holistic Steps to Manage Your Wealth (As the Leader)

money briefcase | how to manage wealth

You may find yourself in the fortunate situation of having wealth, yet you may feel uncertain about how to manage wealth, having never really been wealthy before now.

There are 5 main steps to managing wealth: establish goals, lead your wealth toward those goals, decide how proactive you’ll be, select the types of investments, and employ yourself or someone else to invest your money.   

My steps are a departure from the usual buy the S&P 500 index fund and bonds based on your asset allocation or hire a financial advisor. This is because after almost 40 years of investing, I have found managing your wealth to be a holistic blend of life desires, personal finance tasks and investing.

Establish Financial Goals

When all the bills are easily paid, and you have accumulated wealth, it’s easy to let your money standards go. Having financial goals and tracking your progress toward them, will help ensure that you keep and grow your wealth.

When you establish financial goals, you clarify what is important to you.

And when you have financial goals, you have to track your wealth as part of the process. This is an important element of managing wealth.

You may have created the standard financial goals that you did with a financial advisor, or in a typical program that’s based on investing in stocks and bonds. But dig deeper into what you really want in your life, and all of your options to invest. And think much broader than stocks and bonds.

Write down how much money you have now, and how much you want to have in the future, no matter where you are now.

Brainstorm how you can get there. Wealth begets wealth, so this will be fun if you have already accumulated some wealth. Perhaps all you need to do to reach your goals is to let a certain amount of wealth compound. You can easily check this with a calculator, although the results will be based on best guesstimates.

When you reach that next level of wealth, what will you do? Think of how you can experience life fuller, help others or the do things you’ve only dreamed of doing before now.

Connect with how happy or peaceful it you’ll be when  you reach your goals and live how you want. It’s that deeper emotional connection that will drive you to do the dryer aspects of managing your wealth, such as taking a closer look at your monthly cash flow, tracking your investments better or researching alternative investment ideas.

This financial goal process will help you stay inspired and on track.

And it will lead to keeping your wealth because you have your eye on the ball.

Track Spending

While most people don’t think of tracking spending as a part of managing wealth, it’s an integral step. What else could explain the number of wealth individuals who end up broke from spending all their money? We can’t overlook this often overlooked yet important step to managing wealth.

In the same way that the time it takes to complete a project expands to fill the amount of  available time, spending expands to consume the amount of available money.

When you track your spending you can make sure your money is going toward the things that are really important to you. Your spending doesn’t expand to fill the space. Instead, your spending goes to fulfill your priorities.

It’s easy to live beyond your means when you have “extra” money. Tracking your spending will ensure you live within your means. It will also help you keep your wealth.

Track Your Net Worth

Tracking your net worth is an integral part of managing wealth. It’s also required for tracking your progress to reach your financial goals.

Update your net worth at least once a year, or after a major change in your net worth. Focus on being grateful what you have, not being anxious about what you don’t have yet.

Manage Investment Risk

Managing risk is a huge element of managing your wealth.

What if one or more of your investments decrease significantly in value? Will it decimate your level of wealth?

What if you have a major unexpected expense due to an illness or legal matter? What if the government takes your land, we have runaway inflation, or you hire the next Bernie Madoff?

Some of these things are highly unlikely, and others aren’t that unlikely.  I visited with a woman who was wealthy, until she wasn’t, due specifically to Bernard Madoff (She now lives quite well in South America, which is another post:).

And I know of many land owners in Texas who lost significant wealth due to the government taking a good portion of their land.

Managing your risk is a huge element of managing your wealth.

Click here to read my post on ways to reduce investment risk while building wealth. 

Lead Your Wealth

I’d like to share something that I learned over the years which has really helped me: Be aware that you are the leader of your wealth. Most people think that if they hire a financial advisor or wealth manager, someone else is in charge of their wealth.

The first step, then, is to own your role as leader of your wealth.

From New Post-own your role as leader of your wealth #wealth #retire #financial Click To Tweet

In the media and our culture, wealth management gets interpreted as investing in stocks and bonds due to the billions of dollars made in this industry. Yet managing your wealth goes both above and far beyond stock investing.

Here’s why. First, if you hire a wealth manager, you’re the person doing the hiring. This is a level above investing your money. Second, managing wealth is about much more than stock investing.

When you feel as though someone else is responsible for your wealth, it can lead to giving your power away on a deeper level. Plus, you ease your grip on all the other important elements of growing and keeping wealth when you are thinking the stock market will provide funds for life.

how to manage your wealth as leader

Click here to read my post Wealth Management Tips for Everyday Investors  

Decide How Active You’ll Be

The next major step is to decide what type of investor you want to be. In this post, I am assuming that you are investing your money in traditional investments vs having all your wealth in a money market fund or similar. Therefore, I include this step which applies to stock, bonds and alternative investments since it is an important element of wealth for most investors.

With this step, you’ll decide which investing style you want to use, one that is more proactive or less proactive. I’ve noticed that many investors and financial coaching clients have never really considered this as a decision.

Passive Buy and Hold Investing

With this style, you’ll adhere to a buy and hold strategy. You will experience bull and bear markets causing your net worth to rise and fall choosing to ride them out with this method.

This is the most common investing style, even among financial advisors. It’s also called passive investing. This is the easiest way to invest.

Click Here to read my post How to Know if the Stock Market Will Go Up or Down.

Proactive Value Investing

With this style, you seek and buy undervalued investments and also gradually sell investments as they get overvalued.

This can be a several year process that requires a lot of confidence, patience and ability to go against the crowd, because for some crazy reason, most investors don’t like to buy investments when they are cheaper.

And many financial professionals are under pressure to be almost fully invested even when valuations are very high. This allows investors (and advisors) willing to go against the herd to have an advantage.

Understandably, however, many investors want to buy and hold stocks because it is easier and can work very well for those with decades to accumulate wealth through stocks. (I love the bittersweet view from almost four decades of investing.)

Combination of Proactive and Passive Investing

With this style, a combination of the two strategies is used with a core buy and hold portfolio and a portion of the portfolio set aside for more tactical investing based on valuations.

With this style, you sort of can’t be wrong since you have a strategy that should always work. Nevertheless, they are both stock and bond dependent, so I like a little more diversification into other types of assets.

Which Investing Style Is Better?

It stands to reason that you can get more assets when they cost less. This principle is the same when applied to groceries on sale. Nevertheless, studies appear at various time frames showing the buy and hold outperformed more tactical value type investing.

The reality is that the time frame being measured will determine which investing style performed better during that given time frame. This is due to stock market trends and the economy. Looking to the past few years prior to the years you are evaluating can be a guide instead of relying only on long term averaged returns with the assumption of a repeat performance.

Investment performance data is gathered and shown in a way that is most advantageous to the firm offering services. There is nothing wrong about this, since all companies use marketing that puts them in their best light, just be aware of this as the manager of your wealth. You’re the leader, so understand the numbers as you decide who will manage your investments for you.

Select the Types of Investments

The next step is a variation of most mainstream wealth building. This means that it’s another wealth management step that most people don’t consider due to all the media attention around stocks and bonds.

This step is to decide if you will invest only in traditional investments like most people do. Traditional investments include stocks and bonds. These are sometimes called paper assets.

For the majority people who do not have enough wealth to live comfortably in retirement for life, slightly alternative investing wealth building can be a game changer.

This step will be an outcome of earlier steps, your goals, your net worth and your spending.

We found that alternative investing helped us reach financial independence earlier once we figured it out.

But we also like investments in stocks and bonds, especially when they can be bought at undervalued levels.

Most people who do decide to invest in alternative investments also have wealth invested in stocks. For this reason, the next step to manage your wealth will be to decide who will manage your investments.

Decide Who You’ll Employ to Invest Your Money

The next step to manage your wealth is to decide if you want to invest your own money or hire a financial advisor.

When you use the word employ it takes the intimidation out of investing making it another set of tasks that someone will do. If you hire someone to invest on your behalf, you’ll pay them for a job that you’ll monitor while you lead. If you invest your own money, you’ll take the job seriously.

Click Here to read my post entitled the Pros and Cons of Using a Financial Advisor. 

Make your own investments

With this choice you’ll divide your money into stocks, bonds, alternative investments and money markets probably through chosen funds (Mutual funds or ETFs) based on the amount you want (if any) in each.

While this can sound intimidating, this is simple to construct with standard asset allocation. It’s the cheapest and most proactive method here. With this method you can even incorporate the investments or asset allocations recommended by proven investment experts in their newsletters or products making it even easier.

Click Here to read my article entitled Should You Manage Your Own Money?

Use a Robo Advisor

You can do the same method as above but through an online platform. I have personally not used a Robo Advisor. If you’re considering this, I would compare total costs to investing on your own into low cost index funds or ETF’s.

Most Robo Advisors have financial advisor services for a fee. Most likely, this advice will be based on the standard asset allocation models. But you can always base your purchases on expert strategies as mentioned above.

Hire a Financial Advisor

A financial advisor can have many different certifications, fee structures and methods so it’s important to know investing basics in order to understand and evaluate each of these criteria. She may also have areas of expertise, such as retirement planning or income.

An advisor may invest your money in individual stocks, but usually it will be invested in funds, maybe even index funds. Many financial advisors don’t actually invest your money. Instead, they give it to someone else to invest, acting sort of like a middle man. You are paying for their expertise and the implementation of investing.

It’s worth repeating that if you go this route, you’re still the manager of your wealth. As such, you’ll want to learn enough about investing to confidently interview, evaluate and manage any financial advisor you use.

Hire a Wealth Manager (Also called Financial Advisors)

Above I wrote that you are your own wealth manager. But staying in alignment with the financial terms used in the industry, “wealth managers” are the term used for high net worth financial advisors.  There are no other major differences between financial advisors and  wealth managers, and the roles of wealth managers vary.

Like when hire like a financial advisor, wealth managers also often outsource the actual investing of your money to other wealth managers and “fund managers” (not mutual funds) that usually buy individual stocks and bonds for their clients in the client’s brokerage account.

Sometimes, a financial advisor will place their client’s money with a variety of “wealth managers” who invest your money right into stocks or bonds, as opposed to using a huge institutional fund. Whether funds or individual securities are bought usually depends on the amount of money you have the wealth manager invest for you.

Use a Free Financial Advisor

Many investors don’t realize you can access a financial advisor for free or at a low cost at many brokerage firms when you’re invested certain levels with the firm. Sometimes legal and other wealth management guidance or services are included.

Such advisors recommend funds or wealth managers as appropriate. When you manage your wealth in this way, you can combine investing on your own with an advisor assisting you for some of your investing decisions.

How to Choose Who Will Invest Your Wealth

The simplest way to build wealth is to save a portion of your earnings and invest 25 to 30 years into low cost index funds or ETF’s. Unfortunately, most people don’t realize this until they no longer have 25 to 30 years before retirement.

While investing on your own may sound intimidating, you’ll want to compare the cost and potential returns of investing on your own with that of using a financial advisor.

How to Manage Wealth Recap

These are the four major steps in managing your wealth. As you can see, this goes far beyond investing in stocks.

When you establish and monitor goals, lead your wealth, choose how proactive you’ll be, choose the types of investments, and decide who will invest for you, you’ve covered the basics steps of managing wealth.

In case you forget, the steps for how to manage wealth spell ELATE – Establish, Lead, Active, Type and Employ. Leading your wealth in the right direction is known to cause elation since doing so can deliver amazing results.

If you enjoyed this post, please share it on your favorite social media channel. Thanks for reading.

Camille Gaines



how to manage wealthPin by hovering your mouse over upper left side of this image and clicking on red P.



This article is for information only and is not to be construed as personal financial advice. 




Leave a Comment

Your email address will not be published. Required fields are marked *