Without a doubt, one of the most critical things in life is finances. There’s hardly a thing one would get involved in—be it marriage, a vacation, or healthcare—that wouldn’t require money to foot the bills. Indeed, money answereth all things.
Even when it cannot buy happiness, as the saying goes, wealth can play a vital role in one’s quality of life. And wealth isn’t just about having a vast sum of physical cash. Wealth is the abundance of valuable assets that can be converted into some currency usable for transactions. This is the case with renowned men counted among the rich.
Wealthy people are known to typically possess assets including businesses and lines of businesses, investments, and several other sources of income. This wasn’t achieved in a day. Wealth, indeed, is built over time.
And while building wealth, you must put certain things—financial hedges—in place to ensure you do not lose all you’ve amassed. This process is what we refer to as securing wealth.
In its most basic terms, the path to building wealth is earning more money than you spend, avoiding debts, and investing wisely. But along this path, there are secrets you must be aware of.
So, what are the secrets to building and securing wealth?
1. Earn more
You cannot build wealth when you struggle to make ends meet. You wouldn’t think about saving and investing since your focus would be on settling bills with limited available income. Therefore, the first step to building wealth is to earn enough.
Now, you want to ignore those tables and stories showing how minimal sums saved consistently compound over time to form substantial wealth. The truth is if you do not earn enough, how do you save out of it? And even if you do, how many years would it take you to amass something noteworthy?
Rather than finding ways to cut costs, find ways to earn more. You can do that by diversifying. Learn more skills or put those you have into practice. These days, you can leverage your digital skills and make money online aside from your daily 9-to-5. And one essential thing about building wealth is to find something you enjoy doing.
Enjoying the work you do makes it easier to build wealth, taking the pain and grunt work out of your daily life.
To earn more, consider:
- What you enjoy doing;
- What you’re skilled at;
- How profitable it is;
- How to begin (the education and requirements to get into that line of work).
2. Don’t just save; invest
You’re earning more than enough money now! How great! You’re also saving up the cash by stashing it all in a regular savings account at the bank, which now reads $500,000. How impressive, right? Absolutely not!
Saving money doesn’t make a good wealth-building strategy for the following reasons:
It is too risky. When you run into a civil lawsuit, you can lose your entire savings as damages (compensation for your accuser).
Saving appears as if your money is growing. But it’s not. It’s nothing but what you’ve earned or a part of it that you see in your bank statement. Nothing more.
The value of the money drops over time due to inflation. In that case, you have lost and not earned more money.
At the annual inflation rate of 1.3%, your $500,000 now will only be worth $493,583.4 by next year. Although you’ll still see $500,000 in your account at that time, it can only buy what $493,583.4 can buy now. In 10 years, the $500,000 in your account would have depreciated by 13% to $442,477.9. Imagine how much more money you’d have made if you invested part of your wealth now.
Rather than saving all your cash, invest a considerable part of it to grow what you already have.
3. Invest money appropriately
Investment is inarguably one of the most potent means of building and securing wealth.
However, on your journey towards building wealth, you’d be faced with many seemingly beneficial investment opportunities. But not all that glitters is gold. There are right and wrong investments. You must conduct in-depth research before making any investment decision. To be on the safer side, invest in a financial advisor, and you most likely wouldn’t regret it.
4. Invest in real estate
One surefire way to build and secure wealth in Florida is by investing in real property. The Florida real estate market constantly soars, with single-family houses skyrocketing up to 24% over the last year.
Real estate investment is an excellent idea to build wealth as it offers you a low-risk stream of income that appreciates over time. It also secures your wealth by protecting you against inflation. You also might make the place your home or vacation home in your final days. Therefore, buying investment property in Florida is something you should look towards in building wealth out of your current earnings. Rather than saving money that drops value over time, channel it into something that generates revenue for you. And what’s more?
You don’t get to labor so hard over the management of your property. The dividends come to you even while you sip a glass of wine on a yacht 200 miles away.
5. Create an emergency fund
One way to secure yourself during times of financial hardship is by creating an emergency fund. You could lose your job or even your money in the bank due to a legal suit filed against you. It could also be that you require cash to fund medical bills or a major home repair. Now that everything is rosy, stash away a considerable amount to use for such emergencies. This avoids the need to turn to your primary asset or other unsecured loans.
6. Set and achieve goals
You’d only be aware there’s an increase, but you can’t measure growth if you don’t set targets. But more than a mere benchmark of measurement, goals help you stay focused and committed to whatever tasks you’ve set out for yourself, helping you work towards them in all diligence. This compels you to strive harder to reach your targets faster, thereby fast-tracking your wealth-building process.
While wealth building may look simple, it doesn’t happen overnight. Be ready to take some falls, make mistakes, have exhausting days, and be utterly responsible. But in the end, it will all be worth it.