Building your nest egg to a point that you can put it to work is the next level game plan.
The next level we should all be climbing for is the place where the assets we have accumulated are growing on it’s own due to strategic placement. Earning 5,10, or 20% takes time and temperament. The goal at this level is to grow your pot of gold to the point that the interest supports your core lifestyle.
Investments come in many shapes and forms but the basic concept is time and leverage.
Every wealth accumulation plan begins with the basic strategy of maximizing free and tax-deferred monies. These funds are found in most employer sponsored 401k retirement and profit sharing plans. Allowing your savings to be matched fifty cents on the dollar is free money. Taking your contribution and the employers contribution and allowing them to grow tax deferred is key towards accelerating investments.
Historically purchasing a home was the single largest investment most Americans made. There are still a variety of opportunities to buy right and build decent equity in your private residence. These funds are favorable because you can still deduct interest on the payments and the growth is not recognized or tax until a period further in the future.
Once you have covered the two initial wealth-building opportunities, it may be time to start your own after tax investment account. These are not complicated to open or maintain. There are several ways to start this process.
- Go to your bank Investment Officer
- Open an Online Investment Account
- Find a personal Investment Advisor
A personal investment account should be opened once:
- Accumulated 6 months of expenses
- Purchased Private Residence
- Maximized contribution limits on Qualified Pension Plans
Creating an investment account should be looked upon as on the job training. Consider taking a regular monthly contribution and depositing it in the new account. Begin to expand your investment knowledge by learning risk and reward on small sums of money. As your account grows so will your knowledge of how to manage it and your tolerance for risk.