Saving is starting to become something that many more of us think about. To ensure that you are financially secure for your future, there are many wealth building strategies that you can use.
Ideally, the combination of several wealth-building strategies will give you the best chance of putting your money to work for you. By combining multiple strategies, you can maximize your return and minimize your risk.
Here is a list of some of the most commonly used methods for saving for retirement and for wealth building in general:
IRAs and 401ks are two very common ways to save money for retirement. When you put money into these two vehicles, it’s saved on a pre-tax basis. You do not have to include the money you deposit in these accounts when calculating your taxable income. The money you put into these funds will be invested in stocks and mutual funds. Hopefully, by investing in these underlying investments, your retirement account will continue to grow tax-free. You will have to pay taxes on the money when you use it in retirement. For a full description of how this works, talk to your accountant or investment professional.
Invest directly in stocks and mutual funds. This is one of the most common ways to get more savings for your retirement. Many people think that investing in the stock market is like gambling and that it is very risky. The truth is that if you are willing to take the time to learn a bit about the process (nobody expects you to become an expert, just know enough to ask questions and be informed) you will largely eliminate a lot of the risk. Risk comes from making bad decisions, and making bad decisions usually comes from a lack of knowledge and simply following and receiving advice from someone who often knows little more than you do. Mutual funds are professionally managed, and you can find several funds to invest in. Once again, knowledge is power. Even if you work with a financial advisor, having some understanding of how your money is invested is a smart thing to do… after all, it’s your money. No one will care as much about your money as you do!
real estate. Again, many people will think that investing in real estate is risky, but if you know what you are doing, you will greatly reduce your risk. There are a few ways to invest in real estate, one of the most common is to buy rental properties and rent them out. This provides you with a continuous cash flow. That cash flow that can be invested in other ways to ensure your continued growth. Personally, I think it’s a mistake to hand over your money to some “professional” and hope for the best. I think it makes more sense to learn some basic skills so you can be a partner in all wealth building strategies. This is the best way to make sure your money grows the way you want it to.