When the rains do come, the effective collection and channelling of this resource can help secure not only your short-term needs but eventually your long-term security. Income, like water, needs to be distributed in the most effective way. As illustrated above, income is the source from which the water flows. As each pond builds up to an appropriate level (comfort level), excess water then moves to the next pond. Once the next pond builds up, it also reaches its overflow level, then spills to the next pond. As your short-term needs are satisfied, securing your long-term future becomes the priority and eventually the water ends up in the final pond which we call “ Retirement ”.
At each level, protecting your wealth becomes very important. Insurance against loss of income or assets means that your ponds of money are not unnecessarily accessed leaving you financially “ worse off ”.
The use of tax effective strategies and looking at what government benefits are available will help build wealth quicker. Generally speaking, investments such as shares and property provide higher potential returns over the longer term. Growth, income and tax-advantaged investments all help quicken long-term wealth creation.