WHAT’S LUCK GOT TO DO WITH IT? 4 TIPS TO BUILD (AND PRESERVE) WEALTH
March is green and good luck, the first day of spring (March 19). It’s renewed energy, prosperity and potential as we plan ahead.
While prosperity means different things for different people, being able to realize the richness of life, family, money—wealth—is universal. We all have desires to accomplish something greater than ourselves.
Yet nearly 60% of adults believe they’ll never be wealthy.
Creating wealth provides security to enjoy and care for the people and places you love. With 80% of U.S. millionaires being first-generation “rich,” according to Thomas Stanley who studied more than 1,000 millionaires for his book The Millionaire Next Door, it is not only possible to build wealth but absolutely attainable.
These 4 strategies are the tip of the iceberg. But they get you started—or keep you focused—on reaching your financial goals.
#1 FOCUS ON BUILDING ASSETS, NOT YOUR LIFESTYLE
This step certainly involves a dose (or two) of healthy honesty and humility to accomplish. Let’s start with “lifestyle inflation.”
The biggest mistake that people tend to make when they start building wealth is spending more on themselves if they have more money to spend instead of seizing the opportunity to invest more. The desire to immediately buy new, better, more expensive things to match new perceived wealth, say from a raise, detracts from the goal of building assets that would actually generate more income.
Wealth creation involves maintaining discipline and commitment to see it through. In fact, author Thomas Stanley found that the average millionaire invests 20% of their income each year.
TIP: Use the 24-hour rule to stop spending extra money. This “rule” mandates you wait 24 hours before making non-essential purchases on items you really want but don’t really need.
#2 DIVERSIFY, DIVERSIFY, DIVERSIFY
Most of us looking to create wealth rarely look beyond stocks/equities and bonds. And for good reason. Stocks/equities have a proven track record of providing higher returns than bonds or cash alternatives.
Here’s a look at the stock market forecast for 2024, with interesting insight on how the S&P may perform in this election year.
Additional strategic income-producing assets to boost your wealth include:
· Treasury Inflation Protected Securities, or TIPS, which are marketable U.S. Treasury securities aimed at combating purchasing power erosion.
· I-Bonds, which also are backed by the U.S. Treasury and tied to the Consumer Price Index. Their interest rate is adjusted every six months—in May and November—based on the rate of inflation and can be cashed out after a year.
· Real estate as a tangible investment tool with potential for reliable appreciation and income generation. CAUTION: Demand for commercial real estate, such as office and retail spaces, is still in limbo as more companies are adopting remote work or hybrid models.
Stay balanced: At minimum, we suggest sitting down together to examine your portfolio to ensure it aligns with your long-term financial goals—like a tune-up for your investments.
#3 CONTINUE INVESTING, NO MATTER THE WINDS
Investing is the single most effective way to grow wealth. Inflation can be bad for individuals when you just keep your money sitting in a bank account and do nothing else with it. Keeping assets that are quickly accessible when groceries, gas, eating out—seemingly everything!—is higher these days makes some sleep better at night.
However, true wealth is built by investing, staying the course and pushing through the fear of uncertainty about the global economy’s financial future. Avoid the urge to pull back and hoard cash in lower-interest-bearing accounts, like savings or checking.
#4 PRESERVE YOUR WEALTH AFTER YOU’VE CREATED IT
You’ve gotten this far, now let’s protect the wealth you worked hard to build.
A few tips to get you thinking in the right direction:
Keep the savings pot primed for emergencies and large purchases. With three to six months of living expenses saved in a savings account or money market account.
Stay in tune with tax liability. From a tax-diversified investment portfolio to a charitable giving strategy, there are tax-saving tactics we can use to help you reduce your tax liability. For example, with a Roth IRA, you won’t pay taxes on it again or be subject to required minimum distributions in retirement.
Invest in insurance. Annuities, as well as life, disability and long-term care insurance, can help protect your assets from unexpected changes to your family, career and health, and Lindsey is licensed to help you with all of these options.
WE CAN HELP
You deserve to create wealth and achieve your dreams and goals. Turn potential into prosperity with our expertise. Let’s connect today.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.
The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
