What is Wealth?
Building wealth may seem somewhat impossible, but it is actually quite simple. In fact, you don’t have to earn six figures to turn this dream into a reality. No matter how old you are, you can amass wealth as long as you’re determined.
Importance of wealth
Wealth provides you money to fulfil your future goals. It offers a steady flow of income even when you are no longer employed or working. This can be a great way to ensure financial liquidity and help your loved ones to continue to live a life of comfort, abundance, and security.
Ways you can grow and manage your wealth
1. Start early and save regularly
Time is one of the best friends an investor can have. It allows the power of compounding interest to really work its magic.
Regular contributions, of course, give that compounding effect more to work on. Over a long enough time frame the interest and dividends earned on your savings can vastly exceed your total contributions.
2. Make the most of superannuation
New limits have been imposed on both concessional (pre-tax) and non-concessional (after tax). However, super still provides a favourable tax environment within which to grow wealth.
Most wage and salary earners will benefit by first maximising their concessional contributions and then, if income allows, making some non-concessional contributions.
3. Diversify your investments
Diversification is the single most effective way of reducing investment risk.
Whether it’s cash, shares, property, art, gold or antiques, every investment sector goes through good times and bad.
Spreading your money across the main asset classes reduces the impact that a downturn in any one sector has on your portfolio.
4. Avoid scams
A surprising number of people, including many with good financial awareness, fall victim to a wide range of scams. The losses can be catastrophic, wiping out a lifetime of savings.
Heed the old rule that if something sounds too good to be true, it probably is.
And rather than tugging at your heartstrings, any request for money from an online love interest should set your alarm bells ringing.
5. Use a financial planner
Of course, there’s more to growing and managing your wealth than these few tips can cover.
A financial planner will help you find your way through Australia’s complex system of superannuation and tax, investment and insurance.With both breadth of knowledge and depth of experience, an LDB adviser can craft a financial plan tailored to your requirements.
As your circumstances change and the financial environment evolves, LDB will advise when any adjustments are necessary to keep your plan on course. We can even take the hassle out of managing your wealth with our state-of-the-art portfolio management systems.
When you’re in yours 20s, it might seem like you’ll never reach your financial goals. Here are some tips for how to build wealth in your 20s that will last a lifetime.
6. Create a budget
It will be extremely hard for you to build wealth in your 20s without creating a budget. We talk about this a lot here at Clever Girl Finance, but it bears repeating. There are a few different methods you can try. The cash system means you pay for everything in cash, which should help you spend less.
7. Contribute to your retirement fund
When it comes to how to build wealth in your 20s, saving for retirement is extremely important. Now’s a great time to start saving for retirement even if it seems a long way off! Unfortunately, many 20-somethings aren’t heeding this advice.
8. Focus on increasing your income
If you work hard in your 20s, you may be able to take it easier once you get older. Rather than putting your extra time toward obsessing over the best investment returns, we recommend making time to focus on earning more too. You can do this in a few ways.
9. Cut back on your living expenses
Do you really need to buy that latest piece of technology or splurge on fancy groceries? Chances are, probably not. See how much you can cut back on your living expenses to save as much as possible. You might cook at home more, carpool to work, or even get rid of cable. You may be able to save as much as $360 a year if you skip out on an expensive TV subscription.
10. Find a financial mentor
Being financially sound is a lot better when you have guidance! Obviously, we’re here to help as much as we can, especially with our completely free personal finance courses. But see if you can find a mentor who knows your situation and can provide personalized advice.
11. Pay off your debts
To make money, you need to get out of debt. Debt can snowball and nullify any of your gains, so it should be a priority especially credit card debt. The average interest rate for a credit card is 14.75%, but it’s possible to have interest rates in the 20 or 30% range. Yikes!
12. Focus on improving yourself
Self-improvement should always be a big goal for you. Follow the opportunities that come your way and acquire as many skills and knowledge as you can. You never know where this will lead you!
13. Stay passionate and driven
This is our most important tip when it comes to how to build wealth in your 20s! Building wealth isn’t easy it will require constant vigilance. Sure, a slip-up here or there won’t cause any permanent harm. But before you know it, these once-in-a-while slip-ups will become a regular thing, and then, you’ll have to start from square one.
“Money is good for nothing unless you know the value of it by experience”