Embracing the monetary benefits of innovation

Does innovation help individuals become richer? Does innovation help individuals save more money? The 21st century is arguably an era in which the new waves of technological innovation and artificial intelligence determined the dynamism of the century so far. The young, vibrant population are at the forefront of this dynamism, but even among the older demographics, unparalleled risks are increasingly being taken in personal finance and investments. China itself has successfully generated 2 billionaires per week in the year of 2017, whilst the number of ‘family offices’ are steadily on the rise, with no decline in its trend since the start of the century. What accounts for the increasing wealth of individuals and the growth of ‘newbies’ are the mounting desire for individuals to adopt increasingly innovative behaviour when it comes to investing their personal finances.

Individuals around the world are taking unprecedented risks in investing their finances, and the most recent example is the growing usage of e-commerce. E-commerce is particularly popular among the younger population, who possess more intuition in technological employment. It has not just helped improve the wealth and finances of risk-taking entrepreneurs and founders of technological firms but has also facilitated transactions between markets, resulting in the ‘narrowing down’ of gaps between markets and the reduction in transportation barriers. Such a case is evident in emerging economies like Indonesia in particular. E-commerce platforms such as Shopee have also made online communication between buyers and sellers possible, leading more people to be willing to invest their time and effort into online shopping. From the standpoint of the buyer, e-commerce has not reduced the outflows of cash from individuals, and hence this makes the discipline approach towards money-saving a lot harder, and that can become something that is easily negligible if individuals become too radically obsessed in the purchase of goods via e-commerce. Therefore, it would be useful to stick to a certain set of self-imposed rules that clearly show how your personal income is spent, and how much of it would then be saved. An exemplar rule might consist of splitting income into proportions of 50%, 30%, 10% and 10%, in which the first segment involves using the income for necessities and/or properties payments whilst the other segments for leisure purposes, debt payments and savings respectively. In other words, keeping a personal rule of thumb which indicates how income would be spent would serve as an effective way of ensuring savings are made, particularly during a period when technological innovation determines the changing pace of the world.

From the standpoint of the tech entrepreneurs and founders of multi-million-pound tech companies, innovation engagement is much more rewarding. One of the main reasons that explain China’s surging rise of business tycoons are the exponential growth of younger, more risk-taking technological entrepreneurs that are willing to cash out money from family businesses and reinvest those finances into their conglomerates, or into their ‘family offices’ which are personal investment firms that exclude the middleman. ‘Single family offices’ only serve a single family whilst ‘multi-family offices’ serve numerous families. In both cases, offices manage their families’ wealth and administer their own assets, and founders get paid through dividend. However, an individual worth less than $100 million would find establishing a family office impossible, as this market is only available to those whose net worth is greater than this threshold. These ‘family offices’ have greater assets than hedge funds, and has made up 6% of the international stock markets. It is therefore easy to deduce that business magnates have a lot more scope in investing their personal finances than ordinary individuals due to inherently wealthy backgrounds, but not all entrepreneurs have to be from exceptionally wealthy backgrounds. Instead, tech entrepreneurs cleverly transformed creativity and lust for innovation into multi-million-pound businesses, taking risks at all stages of their entrepreneurship and managed to expand their network for investments and the deployment of money.

It is not too late to become an innovative entrepreneur today, thanks to the growing preferences for technological innovation and gadgets in consumer and capital markets. Statistics have shown that ‘family offices’ had proliferated in Asian hubs like Singapore and Hong Kong during this century, and that there were no negative signs that this trend would slow down for at least the next ten years. Saving money is important, but thinking how to increase personal savings by earning more through entrepreneurship could induce a positive impact on personal savings and investments. The bottom line is to welcome and embrace commercial innovation which can take place in many forms. It was possible for Rockefeller to form his own ‘family office’ in 1882; and hence, if you are willing to exploit and engage in the innovative environment of this century, you could become one of the owners of lavish ‘family offices’ in the future which allows you to have space for your own voice in personal savings, and could also override the power of investment advisory firms!