By Michael Gold, CFP®, MBA, Founder & CEO, Wealth Advisor
What does wealth mean to you?
Many people have different goals and aspirations, but wealth is an often misunderstood concept, despite the number of books that have been written on the subject over the past century.
Perhaps the single greatest misconception about wealth is the notion that earning a high income is the key to financial success. In reality, the key to wealth is discipline.
High earners often find themselves in financial trouble after a few short years of “living large.” Conversely, many successful entrepreneurs started with a low income and little education.
While there is no shortcut, certain tried-and-true practices can create wealth over time.
Building wealth is a practice like any other – it requires mastery of basic principles and consistent practice over time.
Let’s explore three habits that can create a robust foundation for wealth.
1. Investing vs. Saving
A penny saved is not a penny earned. While delaying gratification and forgoing luxuries will set you on a good path, amassing a large savings account will not lead to worry-free retirement.
Most savings and money market accounts pay a nominal interest rate, at best, which is insufficient in keeping pace with inflation. Idle cash slowly loses value over time.
Acquiring wealth, by contrast, requires investing for a return. Regardless of the vehicle in which you choose to invest, it is important to understand the risks and learn how to determine how well a given investment is performing.
One factor that investing and saving have in common is the power of compound interest.
You may be familiar with the classic riddle: Would you rather be given $100,000 per day for 30 days, or a penny on the first day with the amount doubled every day?
The latter option would net you more than three times as much money as the former.
The key to making compound interest work in your favor is to start early and invest regularly. Automated investment strategies that draft money at regular intervals ensure consistency that is more likely to pay off in the long haul.
2. Leverage Tax Strategies
Americans overpay in taxes every year because they do not educate themselves on the tax implications of the decisions they make. Certain financial vehicles may allow you to reduce your tax bill, such as a medical HSA or FSA account that pays medical expenses with pre-tax dollars, or an IRA that allows you to defer taxes on part of your income.
Some insurance products, such as whole life insurance, allow you to realize tax savings and build lasting wealth while protecting your family from unforeseen difficulties.
A tax professional can advise you on the specific strategies that might apply to your particular situation.
3. Educate Yourself Regularly
The greatest investment you can make is not a financial one: Invest in your knowledge base.
Commit to making lifelong learning a daily habit.
You might choose to read a business book for 15 minutes first thing each morning.
Habits retrain thinking and become automatic over time. The more you read, the more you will find your conversations naturally drifting to topics that spark interest in others.
If you want to learn new ways to think about money, start classics such as Napoleon Hill’s “Think and Grow Rich” or Robert Kiyosaki’s “Rich Dad, Poor Dad.”
We’re Here To Help
The secret to acquiring wealth is that there is no secret.
Successful people go to work, show up consistently, and stay the course. They understand that persistence is required, and that while the desired results might not be visible today, the rewards will come in due season to those who stick in the game for the long haul.
We at Gold Family Wealth know that financial planning can feel overwhelming at times. Remember that you’re not alone – we are here to walk alongside you on your wealth-building journey.
Reach out to me at firstname.lastname@example.org or (800) 303-2533 to schedule a complimentary consultation.
Michael Gold is the founder & CEO – Wealth Advisor of Gold Family Wealth, an independent wealth management boutique and named one of The Top 100 Magazine’s 2020 Top 100 People in Finance. Michael has 20 years of experience in the financial industry and has a bachelor’s degree in business and economics from the State University of New York College at Oneonta, an MBA from NYU Stern School of Business, specializing in Quantitative Finance and Leadership and he is a CERTIFIED FINANCIAL PLANNER™ professional. He serves business owners and entrepreneurs by stress-testing their financial plan to identify red flags and missed opportunities. Michael strategically outsources knowledgeable professionals from various fields, such as tax, insurance, retirement and trust, and estate law to collaborate on potential solutions to help position his clients to pursue their desired goals.
Michael currently lives in Westport, CT. When he is not working, you can find him spending time with his wife, Giselle, their three children, Sebastian, Aria, and Pierce, and their dog, Charly. To learn more about Michael, connect with him on LinkedIn.
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