How to build wealth – whatever age you are
For lots of people their main priority is making enough money to live on from month to month, but if you are serious about securing your financial situation in the long term, then building wealth should be your ultimate aim.
Achieving this is not straightforward unless you know some of the most effective strategies for growing your nest egg, whether you are young or old.
Get expert advice from a financial advisor
Before doing anything else, it makes sense to ensure that you can get some tailored tips from a professional that are unique to your specific circumstances, because of course everyone has different needs.
Working with experts like those at Ridgewood Investments will mean that you can not only get the assistance and support you need, but that you can also set realistic goals for building your wealth and also select tactics that are adjusted to the exact amount of risk you are willing to expose yourself to.
Minimize your debt
It is impossible to build wealth if you have debts hanging over you, and so younger people in particular should prioritize paying down any significant amounts of money they owe so that the interest does not continue to hamper their progress for years to come.
Taking on additional debt is obviously unhelpful unless it is strictly necessary; a mortgage, for example, is a type of debt which most people are beholden to, but as long as the repayments do not monopolize more than a third of your household income, then it should be acceptable.
For younger people who are still in work, paying into a pension fund in conjunction with your employer is essential if you want to retire comfortably a few decades down the line. If your job does not afford you direct pension options, then establishing your own investment portfolio sooner rather than later is worthwhile.
Younger investors can afford to take a riskier approach to investing, although portfolio diversity should still be pursued if you want to avoid any serious exposure to unexpected downturns. Likewise if you are in for the long haul, the peaks and troughs of market activity should not really be a concern.
Older investors will usually be better off with portfolios that present fewer risks, especially if they are on a fixed income.
Create a budget & adhere to it
To be able to invest money in the first place, you need to earn more than you spend each month, and building a budget is the best way to do this.
Before you start, look at your current incomings and outgoings and see which areas of your lifestyle are costing you the most, to establish if there is any room for savings.
Frivolous purchases or unnecessary luxuries should be avoided. Likewise if you see that you are paying for services that you do not use enough to justify the expense, such as streaming subscriptions, then cutting these out of your budget could give you hundreds or even thousands more dollars to save and invest each year.
Shield your wealth from surprises
Lastly, remember that you never know what life might throw at you, no matter your age, so having measures in place to ensure that your carefully accumulated wealth is not left in the hands of fate is essential.
Insurance policies which protect both your assets and your income from damage and disruption will help in this context. As well as things like home insurance and life insurance, you might also consider getting income protection insurance, especially if you are the main breadwinner.
Ultimately you will need to choose your own route to growing your wealth, but knowing that there are options should help you get started.