Lecture 1: Entrepreneurial Mind - Wealth Creation PDF

THE ENTREPRENEURIAL MIND THE PERSPECTIVE OF ENTREPRENEURSHIP WEALTH CREATION ISO 9001:2015 Certified  INTRODUCTION Building wealth and managing one's finances are rarely taught topics, so many individual...

THE ENTREPRENEURIAL MIND THE PERSPECTIVE OF ENTREPRENEURSHIP WEALTH CREATION ISO 9001:2015 Certified  INTRODUCTION Building wealth and managing one's finances are rarely taught topics, so many individuals or business owners suffer when it comes to wealth creation or end up hiring. Also, most of them hire professionals to manage their wealth. This lesson introduces the concept of wealth creation, how to manage income, manage and increase income, and choose a suitable investment. The lesson also presents wealth-creation opportunities that are applicable to all individuals. ISO 9001:2015 Certified  OBJECTIVES: At the end of the lesson, the students are expected to: 1. define the wealth creation; 2. explain the importance of wealth creation; 3. discuss the wealth creation plan; and 4. explain the reason of investing. ISO 9001:2015 Certified  What Is Wealth Creation? What is wealth creation, and how can you create a saving strategy that works? This question has probably crossed your mind at least once. During this pandemic, all nations struggle to obtain financial stability, which tremendously impacts our economy. The term wealth creation can mean a lot. To others, it may mean increasing the level of money, getting rich, or investing to increase money. It differs depending on the characteristics and behavior of a person. ISO 9001:2015 Certified  What Is Wealth Creation? In Economics, Wealth Creation is the increase in the number of assets owned by an individual, a family, community, organizations, and country. Since Economics is associated with scarcity, when there is an increase in the resources, especially scarce resources, that can also be considered as wealth creation. In Entrepreneurship, Wealth Creation is the combination of all financial planning and investment advice for the betterment of the assets owned by an individual, family, or company. It includes planning for the future like getting married, having children, the costs of education, tax services, estate planning, and retirement planning. ISO 9001:2015 Certified  What Is Wealth Creation? From this meaning, one can see that wealth creation is important in our lives and it entails different functions in our lifetime. Yet, one must remember that in order to be successful in wealth creation, needs, wants, and goals must be understood, organized, and prioritized first, to be able to meet the growth opportunities of wealth. Furthermore, wealth creation entails the use of one's imagination and hard work to be able to produce massive number of money. Hereby, wealth creation is all in the mind of a person; it is how a person thinks to do something unique that lead to wealth creation and possibly a way out of poverty. ISO 9001:2015 Certified  What Is Wealth Creation? On the other hand, wealth creation is also defined as producing a supply of assets like stocks, gold, cash, bonds, and real estate that are considered sufficient to generate a stable source of income to help in livelihood. As Robert Kiyosaki once said, "Don’t work for money; let money work for you." Also, it is essential to start early, as assets appreciate more in the long run. ISO 9001:2015 Certified  Importance of Wealth Creation Regular source of income. –Good investments provide a source of income; –they help individuals pay bills in the future or even after retirement and –provide emergency cash or fund in times of need or special events and occasions. Healthy Retirement. –Building wealth is a requirement for a healthy and happy retirement. –The wealth creation is essential to those near their retirement years because it can help them enjoy life without so many financial worries. ISO 9001:2015 Certified  Importance of Wealth Creation Goal-based investing. –the first step in wealth creation is determining your goal. –In this way, you know what to do, what to achieve, and how to push yourself harder to achieve that goal. –A goal-based investing help in achieving targeted wealth. Having a goal also works well with finances, for it helps individual to budget income and save more. ISO 9001:2015 Certified  Ideal Wealth Creation Plan Since Wealth creation is a part of a financial plan, here are some steps to consider in planning wealth creation. 1. Create a budget 2. Invest rather than just saving. 3. Understand the impact of inflation on saving. 4. Invest in appreciating assets 5. Become Debt-free. 6. Cut on unnecessary expenses 7. Don’t mix insurance with investments ISO 9001:2015 Certified  What Is Budget? Budget is defined as the estimation of income and expenses over a period of time. It is commonly compiled and evaluated on a periodic basis to achieve a certain amount. Creating a budget is for everyone who wants to track their money and how they spend it. ISO 9001:2015 Certified  Creating a Budget in Five Steps 1. Figure out your after-tax income. –If you get a regular paycheck, the amount you receive after all the deductions, like loans, insurance, etc., is your after-tax income. –If you have other types of income, perhaps you make money from side gigs, deduct the costs and taxes you incur in those gigs, and that will be your after-tax income. 2. Select an appropriate budgeting plan. – The budget should be able to cover all your needs. –Choosing the appropriate budgeting plan to achieve your financial goals and fulfill your needs. ISO 9001:2015 Certified  Creating a Budget in Five Steps 3. Track your progress. – It is essential to track your progress constantly. – In this way, you will know how fast or slow you are in achieving your goals. 4. Automate your savings. – Always automate so that the money you've saved for a particular purpose goes with minimal effort on your part. – You can choose an accountability partner to support you in balancing your budget and meeting your financial goals. 5. Revisit your budget as needed. – You'll never know when to change your budget again. – It can be due to an increase in income, expenses, or priorities. – Therefore, do not forget to adjust your budget accordingly. ISO 9001:2015 Certified  Investment Investment is an asset or item gained to appreciate and produce income. In economics, investment is acquiring assets or goods that will not be consumed today but will be used in the future. In finance, investment is a monetary asset purchased to provide income in the future or to be sold at a higher price for a profit. Investment is an asset that allows money to grow over time. The wealth created from investment can be utilized as savings, income, payment of loans, purchase of another asset, etc. ISO 9001:2015 Certified  Categories of Investment 1. Ownership Investments – a type of investment that assets are owned and purchased by the investor. – Examples include stocks, real estate properties, bullion, and others. Having a business and funding it is also an example. 2. Lending Investments – Bonds are the main instrument when it comes to lending investment. – The money you invest is used to fund banks to give loans to other people and the government to fund some projects. 3. Cash Equivalents – These are liquid investments that can be converted into cash with a low level of risk. ISO 9001:2015 Certified  Reasons to Start Investing ✓To Keep Money Safe – Money conservation is one of the central reasons people invest. Most of the time, people save and invest money to have something to spend when they need to buy something or when there are unexpected expenses, to safeguard the future, and to save up for retirement. ✓To Grow Money – Another objective of investing is to ensure that it grows into a tremendous amount over time. – The appreciation of capital is usually a long-term goal that helps secure future finances. – To grow money into wealth, one must consider different investment options with a significant return depending on the amount invested. – Some of these investments are associated with high risk, but at the same time, the return on the money is also high. ISO 9001:2015 Certified  Reasons to Start Investing ✓To Have a Stable Income –Investing can also help in earning a steady source of income. –It can be your primary or secondary source of income. –Examples of investments that pay out regularly include fixed deposits with regular interest. –Another is buying stocks from companies that pay investors dividends. –This type of income-generating investment helps in paying your everyday expenses and save extra money in the future. ISO 9001:2015 Certified  Reasons to Start Investing ✓To Achieve Financial Goals –Investing can help you achieve short-term and long-term financial goals without experiencing trouble or too much stress. –There are some investment options with high liquidity levels with short lock-in periods; sometimes, there are also investment options with long lock-in periods that are not very liquid. –An individual can choose the most ideal type of investment to achieve financial goals. –It can be an investment with short lock-in periods if one wishes to use the money instantly, or it can also be an investment with long lock-in periods if one wishes to use the money in the future. ISO 9001:2015 Certified  Understanding the Impact of Inflation on Savings Inflation is the increase in the prices of goods and services in a particular economy. It can be the rise of food prices, clothing, transport, housing, etc. As prices increase, people’s capability to consume different goods and services decreases. Inflation that is too high is unsuitable for individuals and the economy. Furthermore, inflation reduces the value of money. Therefore, the value of the money you saved today will not have the same value in the future due to inflation. ISO 9001:2015 Certified 20