I am a distance runner, and I love to participate in stamina-challenging courses like Tough Mudder runs. Most distance runners start with short runs and gradually build up to the competitive distances. I learned to set goals for my daily workouts that allowed me to gain the stamina I needed to compete. As a runner, I used the "start small and think big" strategy. As a financial advisor, I know how that same strategy works for building wealth.
It's never too early or too late to start building wealth. You don't have to be a financial genius to construct an ample portfolio. The actual key to building wealth lies in creating assets. Regardless of how much money you make, you can build wealth over time through assets. Some people think that putting money in a savings account is as good as investing. It’s not. A person can make $100,000 a year and manage to be worth millions of dollars. Others make millions a year and are living in debt.
It comes down to how you handle your money and your wealth building strategy. Here are four suggestions:
Set Goals for Your Investment Strategy.
When your focus is on building wealth, a clear goal of 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.
Stick to Your Personal Budget.
There are some things you can do to prepare for investing that will boost your sense of purpose and financial security:
- Pay off debts. If you are paying interest on the unsecured debt, you will probably spend 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.
Take Advantage of Employer Plans.
The sooner you start a retirement account, the more time your money has to grow and take advantage of compound interest. Take advantage of employer-sponsored retirement plans. Having part of your regular paycheck withheld automatically prevents you from spending it. This process makes it a compelling investment option and saving even 1 percent of your salary now could be worth much more by the time you retire. Increase your contribution with each raise you receive – you can't miss what you didn't have!
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 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? Get 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.