Asset Management is managing investments made in terms of money with the focus to get higher returns and to gain profit is called Asset Management. To put in simple words an Asset puts money in your pocket even when you are not working.
Assets can range from various commodities like real estate which can be commercial or residential both being good assets, investing in stocks and shares of any company and gaining profit from it can also be called as an Asset. Investing in mutual bonds can also be considered as paper assets, but it is necessary to manage to all the Assets an individual has in order to maximize his/her investments and to expect higher returns.
People also hire personnel accountants and managers in order to look after their investment so that they can be kept informed and take necessary measures when required.
Wealth Management is managing the amount of money that has been earned and to maximize it by various processes and methods so that it can be converted into generational wealth by which future generations can also benefit.
Managing wealth can be frustrating and often stressful as it includes many things like paying less tax to the government, home insurance, education planning, pre-planning on the distribution of wealth among family members as generational wealth. Not spending away a fortune in non-essential pleasures and items is also considered as smart Wealth Management.
Asset Management vs Wealth Management
The main difference between Asset Management and Wealth Management is that asset management is managing investments that give a person returns on his/her money and Wealth management is managing wealth that is already present to increase and maximize it.
Comparison Table Between Asset Management and Wealth Management (in Tabular Form)
| Parameter of Comparison | Asset Management | Wealth Management |
|---|---|---|
| Concept | Managing Assets means managing investments made by an individual by investing personnel money. Asset gives a high return on your investment. | Wealth is the amount of money that an individual already has and wants to manage it or protect it for future generations so that they can benefit. |
| Positives | Assets produce income which is very beneficial because this type of income is instantaneous even if a person is not working. | Wealth Management helps family members to thrive by getting access to generational wealth which can help in the overall function of the family. |
| Negatives | Managing Assets can sometimes become hectic and can require much more capital to be profitable which can be stressful. | Managing and protecting wealth is very difficult and requires complex processes like paying less tax legally and other issues. |
| Capital Involved | Assets require at least 5 times more money than the return on investment initially but more capital could also be required. | Wealth can be any amount that the person has earned in his lifetime either by job or business or by investing and is now needed to be managed. |
| Risks Involved | Assets are of many types like stocks of any organization or real estate either commercial or residential which involves huge capital and every asset may not give returns. | Managing and protecting Wealth could involve paying less in taxes which if not done legally could be counted as tax evasion which is a fraud and has high consequences. |
What is Asset Management?
We all have heard a phrase about money which is “It takes money to make money”. This is very true in the case of Assets. Assets are investments made by people to secure high gains or high returns on the money they have invested.
Assets are of various types like real estate which could be commercial real estate or residential real estate, stocks of various organizations on enterprises listed on the share market, ETF’s, mutual bonds, people even invest in businesses or start-ups which if they become successful gives the highest return on investment.
Many people consider their home an Asset which is not an in reality because it takes money out of your pocket instead of putting money in your pocket. Managing Assets can be sometimes stressful and hectic.
What is Wealth Management?
Wealth is referred to as the amount of money a person has accumulated in up to the present time. Wealth requires proper management if not the person can inquire about the loss of wealth either due to excessive spending or poor management. Saved money is dead money because of factors like inflation and rising amounts of consumer goods.
So, it is better to manage wealth properly and to maximize it. Managing wealth can become generational wealth. If a person tries to avoid paying taxes legally then he/she can face serious consequences so wealth management should be properly planned and cautiously executed in order to protect and maximize wealth.
Main Differences Between Asset Management and Wealth Management
- Asset Management includes managing investments like made in paper-like stocks, bonds, mutual funds, or made in a physical property like real estate.
- Wealth Management includes managing wealth either by paying less tax legally or creating an LLC corporation.
- Generational wealth can be created by managing of existing wealth.
- By having more Assets more financial stability can be created.
- Assets require initial capital while wealth is a capital to be managed.
Conclusion
Whether you want food, product, or any service you can only get it through money, so it is important to understand the concept of Asset Management and Wealth Management to do good in this world financially.
Learning about these concepts will broader your knowledge about money and would help you to enjoy stability and provide your loved ones with generational and long-lasting wealth.
There are many types of Assets like real estate commercial and residential, bonds, ETFs, mutual funds, and investing in businesses that could provide higher returns on your investment and stability in monetary value. There are also many methods to manage wealth like Insurance, planning of education, tax planning, home loan, forming an LLC corporation to pay less tax and get a cheap interest rate on loans which can all help produce generational wealth.
References
- https://journals.sagepub.com/doi/abs/10.1111/j.1741-6248.1992.00181.x
- https://jpm.pm-research.com/content/36/1/100.abstract