Building wealth is important to achieve a range of personal goals, from sending your children to college to retirement in style to surviving tough economic times. But building a solid financial base will also assist you during stock market fluctuations and bear markets, recessions and medical setbacks. If you are like many families today, wealth building means saving and protecting your income for the future. Inadequate funding can erode your financial stability, leaving you vulnerable to rising costs and lowered income. To avoid these dangers, it’s wise to learn how to invest wealth effectively so you can secure your future.
If you’ve been thinking about saving for something like a college education but aren’t sure where to start, contact a financial planner who can make recommendations. Often, they’ll be able to put together a few action steps you can take to build wealth now. If you have a specific plan in mind or an initial goal in mind, talk with your advisor. He or she can walk you through some options and lay out a realistic path toward achieving your wealth goal.
It’s not enough to just think about getting started. Once you’ve decided to go after your wealth goal, you have to get started. That means establishing a financial foundation that will provide you with the resources you need to get started and to maintain your lifestyle once you’ve reached your goals. A financial foundation is similar to a road map to reach your destination.
Establishing a savings account is an excellent place to begin your journey to building wealth. This account should be used exclusively for savings – it should not be used for non-retirement spending or anything else that will get you to debt. Your main focus should be the savings account that will provide the cushion you need to get through rough times and earn enough money to support yourself and your family until you have achieved financial independence. Ideally, your interest should be compounded on the interest earned by your savings.
Once you have a savings account that you will use for retirement, make sure you understand how to best utilize it to make money for you at retirement. Will your portfolio make for a great retirement home? Is it important to have access to cash to make your life easier after retirement? Ideally, the answers to these questions are going to depend upon the individual investor. For most people, a good portfolio will help them reach their financial objectives without making them feel like they’re drowning in a sea of debt.
Another way to create wealth and protect wealth after retirement is by having a tax-free savings account. You can build a tax-free savings account by taking advantage of current tax laws. Look up current tax laws for your state and local area to find out what types of deductions and tax credits are available to you. You’ll want to take full advantage of every tax break your area provides. In general, there are several areas where you could save if you’re interested in saving for your golden years: capital gains tax, state and local taxes, car insurance, personal property tax, renters insurance and even interest on mortgages.
When you build wealth, you also need to make sure that you have access to money to make those savings to work for you. One option is cash back credit cards. Credit cards that give you cash back on purchases are a great way to build wealth. Just make sure you understand the terms of the card, and know how much cash back is actually allowed. Also, if you pay off your balance in full each month, you may not actually be paying cash back, but instead might be charged a fee for having the credit card.
Finally, you may need to make some supplement payments or use some other kind of income to supplement your retirement savings. If you have a part-time job, you may need more than a half-time job’s worth of income to supplement your savings. Some other options include tapping into your employer’s 401(k) plan, getting some money from your bankroll to go toward your savings, borrowing from family or friends, or opening a brokerage account and investing part of your money there. Investing some of your money into an interest-bearing money market account like the Money Market funds from Fidelity Investments is a great way to make sure you have some liquid cash to rely on when you need it. If you use your savings for supplementing your retirement savings, at least part of your money will be there when you need it.