Wealth strategies should build financial legacies that outlive future generations. In this write-up, we look at stock market investment, real estate, and entrepreneurship as wealth building strategies that can secure your financial future.
The American dream holds the possibility of upward mobility and financial success for everyone. We wake up each day to pursue the American dream because we believe in it.
While optimism matters, having a solid plan or wealth strategies is even more important.
Wealth strategies are plans of action with clear financial goals and objectives. Comprehensive wealth strategies empower you to take control of your financial future. Wealth building strategies are all about reaching your financial targets and goals while mitigating risks.
Wealth strategies are built on the following foundation:
The good news is that there is no inopportune moment to start working on your wealth strategies. Even if you do not have the factors above sorted out, you can make them top priority goals in your wealth strategies.
The primary factor in wealth strategies is income generation. With just one income stream, you can save and use your savings to multiply your income streams through investments.
Comprehensive wealth building strategies include investment options because investments are the key to wealth generation. Productive investments generate income for your wealth strategies to yield wealth.
The types of income streams generated from investments in wealth strategies include:
Some income streams are more accessible than others. Most American households incorporate the following income-generating investments in their wealth strategies:
If you do not yet have wealth strategies, the wealth strategies above are viable options for Americans in all income brackets. Let us look at the pros and cons of each of the above wealth strategies. We will also look at how to get started on each of the three wealth strategies.
The stock market is where the shares of publicly quoted companies are sold and bought. Companies sell shares to the public to raise capital. When you buy stocks you get equity which in turn earns you dividend income to facilitate your wealth strategies.
Dividends are cash payments made to a shareholder on a regular interval. They are also accrued from the profits gained by the company issuing the stocks.
Apart from cash dividends, stock market investment wealth building strategies can also earn you stock dividends, property dividend, scrip dividend/promissory note, and liquidating dividend.
Statistics suggest that approximately 55% of American households own stock. They also show disproportionate wealth gaps between households that employ stock wealth strategies over real estate and other wealth strategies.
As stated above, the stock market is a rather complex space. However, it is not impossible to crack. Below are some tips on how to get started on stock market investment wealth strategies.
The investment approach you select for your stock market wealth strategies is determine by your knowledge of the market, risk appetite, and the time and effort you are willing to put in.
It is an active approach that involves investing in a limited number of stocks that you will be fully responsible for managing. It involves constantly studying earnings reports from companies.
All the trading decisions rest solely on you. You need to be adept and have time to dedicate to selecting stock and monitoring performance.
Individual stock wealth generation strategies include:
It is a passive method of stock investment wealth strategies that tracks a stock index. And It constitutes a diversified portfolio made up of different stocks and bonds. It has low risk because fund managers ensure it performs similarly to the market index.
It is also a passive investment style whereby a brokerage makes investments for you while factoring tax efficiency. It also factors in your investment goals, and risk tolerance according to your age.
Note that stocks are truly viable in the long-term. Invest an amount that you will be comfortable not accessing in the short-medium term.
These are specialized accounts for buying stocks. There are two types; a standard brokerage account and an IRA (individual retirement account).
The former is best if you want easy access to your funds or want to save more than the maximum limit on an IRA requirement. Choose an account according to your financial goals and wealth strategies.
Consider whether they charge trading commissions. Also, consider the features they offer such as educational tools and company performance insights. You can do this online.
Note that points 3 and 4 above apply if you opt for the individual stock route.
Real estate investment wealth strategies involve investing in property. The Real estate wealth strategies are viable because real estate is a productive asset.
You can purchase, resell, own, manage, develop, or rent real estate. Real estate wealth strategies earn you either profit or rental income.
You can start a business for self-employment or as a second income stream.
The three wealth strategies above have different pros, cons, and requirements. Consider there before choosing any of the wealth strategies. You can diversify your investment by investing in multiple wealth strategies. However, be certain that the wealth strategies are your vehicle to financial freedom.