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Is Your Savings Plan Building Wealth?

Is Your Savings Plan Building Wealth?

| August 31, 2017
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As an independent financial advisor in DC, I often meet with clients who stress over the amount of monthly savings they can achieve. Most people know that they should put aside a certain percentage of monthly income – anywhere from ten to twenty-five percent. That's a good start, but I have to remind them that there is a difference between just saving money and building wealth. The size of that difference is determined by how you invest that money – your investment strategy.

Wealth Building Strategies

Let’s say that you save ten percent of your income each year. Over time, thanks to compound interest, you could have a solid savings balance. Additionally, if you are comfortable assuming some risk in your investment portfolio you could have the potential to substantially increase that savings balance. This is how you begin to accumulate real wealth. If you are not familiar with the process of investing it can be intimidating to take the financial leap. There are so many different options available. Here are three steps you can take to get started:

1. Set Goals for Your Investment Strategy

When your focus is on building wealth, a clear goal like financial independence or early retirement is necessary to keep you on track. Determine how much you need to invest each month to meet your goal. Then you can set up accounts that allow you to make automatic deductions or contributions each month.

2. Stick to Your Personal Budget

There are some things you can do to prepare for investing.

  • Pay off debts. If you are paying interest on the unsecured debt, you will probably pay more in interest than what you will earn on your investments.
  • Set up a separate emergency fund. You may also save up for things like home repair and vacations.
  • Invest ten percent of your monthly income. If it is in addition to your retirement savings, this strategy will help you begin to build wealth and retire comfortably.

3. Get Help from a Financial Advisor

You don't have to do this on your own. Unless you have expertise in finance, consider getting help from a professional investment advisor. An independent financial advisor will listen to your goals and help you create a financial plan to achieve them. There are various investment options, like stocks, bonds, and money market funds that can be used to build your investment portfolio. Your financial advisor should be able to explain all of this to you.

Have questions? Are you looking for an independent financial advisor in DCGet in touch today.

Material discussed is meant for general illustration and/or informational purposes only, and it is not to be construed as investment, tax, or legal advice. Although the information has been gathered from sources believed to be reliable, please note that individual situations can vary. Therefore, the information should be relied upon when coordinated with individual professional advice.

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