How to grow your wealth

Surely, you consider wealth as the value of all the assets that you have accumulated under your name, such as real estate, investments, bank accounts, cars, among others.

However, investments and bank accounts are only part of your financial capital, which represents all your money saved and put to work in the market.

There is an additional concept, known as human capital, which is the potential to earn income over time. The result of your work plus that of your financial capital, forms your total wealth.

Wealth = human capital + financial capital

During your life cycle, the dynamics of your wealth behaves as follows:

In an initial stage when you are young, your human capital is very broad, in terms of the income potential that we could have as a result of working during future years and, as we get closer to our retirement stage, they tend to decrease.

On the contrary, the financial capital is initially low; you take time to invest or generate savings, but over time, it begins to increase, and with it your total wealth.

Therefore, we share three tips to make your wealth grow over time.

As you generate income, you must invest a proportionate share, that is, have the discipline to channel resources from your human capital to the construction and growth of your financial capital for as long as possible.

This is important, since discipline significantly enhances wealth over time. It is important to emphasize that, regardless of the level of income, the relevant thing is the percentage that you allocate to investment.

It is very common to associate investment in equities only with risk tolerance, when it is also a concept of time. Investing in equities is something that characterizes the majority of pension funds, both public and private, and these contemplate the age of the holder, that is, the younger, the greater participation in equities and vice versa.

This is because the actions are a class of assets that statistically, has shown that in long-term horizons they are the most profitable in history, despite their ups and downs that are softened over time.

Both specialized investment companies for saving retirement workers (Siefores) and commercial investment funds are investment products widely used to enhance the resources of investors over time.

In Mexico, investment funds and Siefores total more than four billion pesos in net assets, which shows that they are the most demanded investment products to favor the growth of wealth.

This means that human capital is considered a catalyst that favors the construction of financial capital and, therefore, the growth of your wealth.