Syndicate
Your Financial Profile
The first step of any financial program is the determination of an objective, that is, the reason for which you are going to accumulate financial assets. Of this objective, we could give several examples, among them, the buying of financial elements for the simple taste of doing so and the acquisition of asset items for giving the initial for a house, open a business, paying for the studies of your sons or to have a prevision fund for retirement.
Once you have clearly defined the reason or purpose that moves you to accumulate financial assets, you can apply to your asset balance sheet to help you reach all your objectives.
When you establish an asset balance sheet, what you are doing is to take an instant picture of your financial profile. With time, this financial profile will change. As a general rule, the assets items of a young person forms part of that category of goods that receives the name of “realizable assets”; that is, cash money, saving accounts and deposit certificates, When people get older, they get married and they form a family, the nature of the asset items changes (mainly due to the acquisition of a home) and passes to form the category of goods known as “short term non realizable assets”.
The inflation of these last years, combined with the increasing that the demand for homes suffered when the generation born after the Second World War entered its matured age, gave place for most part of the real state to experiment a substantial capital gain. Almost the totality of individual with ages between 40 and 60 years have seen their net assets increase by the revaluation of their real state and also, although in lets amount, by the increasing of the value of their retirement programs.
In the case of middle age people or more, that don’t have need to buy a home nor to pay for the raising of their children, the collocation of money is no longer done in goods of “short term non realizable assets”, they have gone back to those goods of (realizable assets); this is due because people go through a period of their life in which they have the capability to accumulate capital, not only for investment, but also to prepare themselves for retirement. Although not all the readers fit on this scheme that we have just described, this may be useful as a point of reference to analyze in which way the financial assets of each person adapts itself to their style of life and to its age.
The asset balance will discover a series of details related with your financial profile. What is more important is that it tells you the amount of capital you have to work with. If you know the amount of capital that you have and sort of have the established date for fulfillment of your financial objectives, you can determined the rate of return to which you aspire will determine in great measure the type of investment (for example: blue chips or new issued securities); on the other hand, it will also mark the level of risk that you will have to accept for obtaining your objective.
Finally, to prove if the investment program that you have chosen is the appropriate for your needs and resources, you should have in mind, along with your declaration of asset and investment objectives, your age and style of life, that is, your psychological profile.