Many aspire to build wealth, but there isn’t a clear-cut path to success. Most can agree building wealth requires a combination of discipline, knowledge, and the right strategies. Let’s explore three essential pillars for building wealth: Saving, Investing, and Protecting.
Saving is Step One to Building Wealth
Saving money is the foundation of any wealth-building strategy. By setting aside a portion of your income for future use, you create a safety net and a source of capital to invest. Most millionaires are self-made, meaning they weren’t handed a large sum of money, most start with a small savings and an average job. What sets them apart is their ability to think long-term and remain consistent in their wealth-building efforts.
Saving doesn’t mean stashing away what’s left at the end of the money, it takes intentionality:
Budget — living within (or under) your means allows you to free up funds you can put into a savings account, brokerage account, or retirement account.
Automate Savings — Pay Yourself First is common advice that helps a person stick to a savings plan. When getting paid, start by putting a portion into savings, requiring you to live off the rest. Automate the transaction to help set yourself up for long-term saving success.
Create an emergency fund — By maintaining a healthy balance in a savings account, you have access to cash when life throws you lemons. Whether it is an unexpected car repair, medical emergency, or house repair, covering emergencies without dipping into other savings or investments means fewer setbacks. From time to time you’ll need to rebuild your emergency fund, but having easy access to cash can keep you on track and greatly reduce stress when you run into hard times.
Investing Your Way to Wealth
While saving is essential to cover living expenses, saving alone likely won’t generate substantial wealth. Investing your savings wisely allows your money to work for you. Here are some key considerations for successful investing:
Educate Yourself: Before diving into any investment, educate yourself about different investment vehicles such as stocks, bonds, mutual funds, exchange traded funds (ETF), real estate, and more. Conduct thorough research to understand the risks, potential returns, and tax impact.
Diversification: Spreading your investments across different asset classes and industries helps mitigate risk. Diversification reduces the impact of a single investment's poor performance on your overall portfolio.
Maintain a Long-Term Mindset: Approach investing with a long-term perspective. The power of compounding allows your investments to grow exponentially over time. Be patient and avoid making impulsive decisions based on short-term market fluctuations.
Protect Your Wealth For the Long-Haul
Intentionally protecting your wealth is crucial to safeguard against unforeseen circumstances. There are many risk management strategies, which we cover in-depth with clients. How you project your wealth is dependent on your goals. One factor all should consider is estate planning.
Creating an estate plan ensures the smooth transfer of assets to your chosen beneficiaries while minimizing taxes and legal complications. We recommend seeking professional assistance in estate planning, especially as your net worth grows. While this may not be the most fun part of building wealth, it’s necessary to guarantee your later years align with your wishes and that the next generation benefits from your wealth as you see best fit.
Not sure where to start in protecting your wealth?
Having a will is a great place to start. Others will consider transferring assets into a trust.
Designate beneficiaries wherever possible. Wherever you’re holding money, make sure you take the time to designate who should receive the funds should you pass away.
Create healthcare directives. There are differing opinions when it comes to health-related decisions, especially when an individual has become incapacitated either temporarily or indefinitely. Take the time to talk to those close to you and share your wishes. Putting these desires into writing is also a helpful step, through health directives. This not only ensures your wishes are met but eliminates a large amount of stress from those caring for you during an already difficult time.
Integrated Wealth Management — Helping Delaware Retirees Build and Protect Their Wealth
Naturally, most of our clients reside in Delaware, but we’ve helped individuals and couples from all over build and protect their wealth. Building wealth is a journey that requires discipline, patience, and a well-rounded approach.
By implementing the principles of Saving, Investing, and Protecting, you’re setting yourself up on the path directed toward financial prosperity. Remember, building wealth takes time and commitment, but with the right strategies and mindset, you can achieve your financial goals and secure a brighter future.
About Integrated Wealth Management
Integrated Wealth Management is owned by Burt Hutchinson, CPA, CFP®. We’re a CPA-led organization, meaning we’re here to handle your complex tax scenarios and provide cost-saving insight related to your financial plan.
We’re here to guide you through the 3 stages of retirement:
Uncertainty Stage: When you are within 10 years of retirement and have questions about how to make it work
Stability Stage: When you have reached the financial milestone to retire comfortably and confidently
Reflection Stage: When you are looking to leave a legacy
We are also here to provide experienced, empathetic support during times of loss, such as the death of a life partner. You need confidence and a sense of security to enjoy retirement. As fiduciaries with a fee-only structure, we never receive commissions. Free of ulterior motives, you can be sure we’re focused on your goals.
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Disclosure Statement:
This presentation is not an offer or a solicitation to buy or sell securities. The information contained in this presentation has been compiled from third-party sources and is believed to be reliable; however, its accuracy is not guaranteed and should not be relied upon in any way whatsoever. This presentation may not be construed as investment, tax, or legal advice and does not give investment recommendations. Any opinion included in this report constitutes our judgment as of the date of this report and is subject to change without notice.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website, Past performance is not a guarantee of future results.