Wealth management represents a different way of looking at financial wellness. From a wealth management perspective, there are many steps that an investor can make to ensure that their financial portfolio remains strong for decades to come.
Taking into account the principles of wealth management, businesses and individuals can increase their net worth and take advantage of any money-making opportunities that may arise. Delaena Kalevor from Orange County, California, an experienced financial professional, shares these 8 tips to help people build lasting wealth for the future.
1. Don’t Wait Until Debt is Paid Off
This may seem like a counterintuitive principle, but it is important to start investing as early as possible. Even though it may make sense to put as much of your budget toward debt reduction as possible, it is wise to start investing early in your career. For example, if you decide not to start a 401(k) until you are established in your career and when your debt levels are low, you will have lost out on years of income growth. It pays to prioritize paying off debt, but not to the exclusion of investing.
2. Make Sure Your Advisors Have Coordinated Goals
If you have a variety of advisors for stocks, bank accounts, and investments, it pays to make sure that all of these advisors are working together. If these professionals are put into competition with each other, you will lose out on the coordinated wisdom they can provide. When you make sure that your advisors are working with the same data, you will be better able to focus on your net returns.
3. Diversify Your Portfolio
If you own a business, don’t keep too much of your capital tied up in it. Make sure that you have a broad portfolio of investments, from stocks and bonds to real estate. This will enable you to take advantage of different risk profiles and may help you save your money if your business experiences a downturn. Find a way to balance investing in your business with protecting your overall net wealth.
4. Keep Your Wealth Liquid
Don’t tie too much of your wealth up in investments that can’t easily be converted to cash. Make sure that you have enough invested in areas that can be quickly turned to cash, including areas like short-term stock investments. Investing too much in real estate or in time-limited investments like a 401(k) may mean that you do not have the capital you need when an emergency arises.
5. Be Sure to Obtain Tax Breaks
It pays to make sure that you fully understand the potential gains in your tax situation. You should be able to take advantage of all of the deductions, loopholes, and provisions that can help you save money on taxes. Start by engaging a business or personal tax professional like a CPA. Make sure that this person is experienced with preparing complex returns and knows tax law very well. Saving money on taxes means that you can directly absorb this money into your wealth portfolio.
6. Have Funds in Reserve
Everyone who wants to build lasting wealth needs to have a hedge against the risks they are assuming. When you are planning an investment strategy, make sure that you have 6 to 12 months of daily expenses in a liquid account. You may experience a financial downturn, and you may find that investing in the stock market is not going well for you. It is crucial to keep money aside for these unforeseen circumstances.
7. Automate Investment
It is smart to have your investment money deducted directly from your bank account. Slow and steady investments are better than putting in large chunks of money at irregular times. This tip can help you enhance your net worth and help you protect yourself against serious losses in the market.
8. Carefully Choose Your Beneficiaries
When you have wealth to think of, it is important to decide what will happen to this money after you pass away. It is smart to decide what will happen to your investments and to your business after you are gone. Consider what each one of your beneficiaries could bring to the table. Especially if they are capable of running your business without a great deal of trial and error, they may be the ideal person to whom to leave your wealth.
Wealth Management Doesn’t Have to be Complicated
These 8 simple tips can help people with varying portfolios manage their money with the future in mind. Delaena Kalevor encourages all investors to approach their money from a wealth management perspective. This attitude can help investors build their net worth for the future.