Growing your wealth often takes time, lots of time. By having patience and diligence, it’s possible to meaningfully turn your hard-earned savings into true wealth. The definition of wealth varies greatly from person to person, so it is important to first consider what being wealthy looks like for you and your family. To some, it may be working less and enjoying more leisure time. For others, it could be a bigger home and the ability to travel the world.
In any case, growing wealth is often a long journey with very few shortcuts. In order to successfully grow your wealth, you must start with the basics of living within your means and paying close attention to your financial world. Beyond this, it can be helpful to consider a variety of strategies for building and growing your wealth over the long term. Below we share our best suggestions for wealth building strategies.
Keep to the Basics
Regardless of what additional paths to financial success you may take to further build your wealth, keeping to the basics of spending less than you earn and being involved with your finances are critical components. At the core, financial success comes down to math. If you save more money than you spend, you have an opportunity to invest and build wealth. Additional avenues for bringing in more money will only help you along your journey if you have mastered these key basics of money management.
Starting a Business
Starting a business can impact your opportunities for wealth and allow you to control your destiny along the way. Perhaps you have valuable knowledge or experience in a particular field, a novel idea, or a way to improve or disrupt an industry that could be leveraged to create a new business. Starting a business is not without challenges and can be a risky proposition, but the potential rewards make this an attractive way for many to work toward a desired level of wealth.
Refinancing your mortgage
One sure way to grow your wealth is to pay close attention to the amount of money you pay on any debt you have. For most of us, the largest amount of debt that we have is in our primary residence. Refinancing your mortgage debt with the goal of obtaining a lower interest rate, and thus saving money on what you pay to your lender, can be time-consuming but the savings are well worth it.
Creating Passive Income Streams
When you hear the words passive income, you might think that this approach allows you to simply do nothing and let the cash roll in. But like most wealth building strategies, there is work involved.
Creating passive income usually means that the work you do is typically done upfront. Only once that work is completed will you be in a position to reap the benefits with little continued effort. Passive income can come from a variety of sources and is most commonly associated with a real estate portfolio or an investment strategy that consistently pays dividends or interest, although there are other methods for creating passive income streams.
For some, the investment options available on the publicly-traded stock market may not be quite enough of the risk-versus-reward opportunity they are looking for to grow their wealth. For wealth builders with a bigger appetite for risk, investing in alternative investments can result in larger rewards. Popular alternative investments include real estate, private equity or collectibles, commodities, and precious metals. It is important to note that these investments can be highly illiquid and difficult to properly value.
Do I need a CPA?
Your finances may be simple enough that you can easily file your taxes on your own or using an online tool like TurboTax. However as your wealth continues to grow, it’s important to seek the help of a professional who can guide you through the best way to file your taxes so that you are only paying what you truly need to pay in taxes. This way you can be tax efficient with your wealth building plans. You work hard for your money, so finding ways to reduce the amount you pay in taxes is a smart investment.
When starting to grow your wealth, start with the basics to build a strong foundation. Once that’s established, explore the topics we’ve discussed here to see which could work to get your wealth working for you to a greater degree!
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