Creating wealth can seem like a mystery.
It seems everyone online knows how to do it, but there is so much conflicting advice. From get-rich-quick schemes to crypto traders to meme stocks, it’s hard to know how it actually works in the real world.
I’m a financial planning expert: here are 5 things you should never spend money on if you want to be rich
Read: How to build your savings from scratch
We decided to enlist the experts who know all about wealth building to share the best ways to build wealth the right way, without tricks or gimmicks. This is the real way to build wealth from an expert financial planner, not a flashy sales pitch from someone trying to make money from you.
Jamie M. Lima, CFP® and founder of Woodson Wealth Management, reveals his top seven ways to build wealth.
Save and invest
Saving money may seem obvious, but putting money in a bank account won’t make you rich. You need to invest to allow compound interest to work and grow your money. Here is how Lima describes it:
“Saving and investing is perhaps the most obvious way to build wealth, but it’s also one of the most effective. By putting your money in a savings account or investing it in stocks, bonds or real estate, you can grow your wealth over time. The key is to start early and be consistent. Even if you can only save a small amount each month, it will add up over time.
And time really is the key. The longer you invest, the more time you have for your money to grow. Compound interest works best over periods longer than 20 years with regular contributions throughout the period.
See: 9 safe investments with the highest returns
Living below your means
Again, this may sound like simple advice, but in practice, living below your means is the only way to find extra funds to invest. You don’t build wealth by spending your earnings, no matter how much you earn.
Lima likes to focus on the necessities. “Living below your means is another important way to build wealth. It means spending less than you earn and avoiding debt. By living frugally and avoiding unnecessary spending, you can free up money for saving and investing It may not be easy, but it’s a crucial step in building long-term wealth.
start a business
If you want to build wealth faster, one of the best ways to do that is to start a business. Although there is a limit to the amount you can reduce from your expenses, there is no limit to the amount you can earn if you start your own business.
But it’s also risky, Lima acknowledges, “Starting a business can be risky business, but it can also be a great way to build wealth. By starting your own business, you can create a revenue stream that has the potential to grow over time. It also allows you to take control of your financial future and build something you are passionate about.
Invest in real estate
Real estate has long been one of the best ways to build wealth. In today’s economy, you can set aside very little money, upgrade property sparingly, and rent it out to increase both income and prices. It can be risky and many have lost money investing in real estate, but if you have a plan in place you can use mortgage debt to your advantage.
“Investing in real estate can be a great way to build wealth,” Lima said, “especially if you are able to buy properties that go up in value over time. By renting out your properties or renting them out. returning to profit, you can generate income that can be reinvested to create even more wealth.
Build a diversified investment portfolio
Investing in meme stocks can be fun, but creating real wealth requires protecting your investments by diversifying. You can still get solid returns, but avoid the risk of putting all your money into one investment.
Lima said, “Building a diversified investment portfolio is important because it helps reduce risk and maximize returns. By investing in a variety of stocks, bonds, and other assets, you can spread your risk and increase your chances of making money over the long term. This is especially important as you get closer to retirement, when you may want to shift your investments towards more conservative options.
Pursue your studies and personal development
Learning new skills and working on yourself is always a good return on investment. It can help you increase your income and lead a more fulfilling life.
Lima shares that “investing in education and personal development can also be a great way to create wealth. By improving your skills and knowledge, you can increase your earning potential and open up new opportunities for advancement. This can lead to higher salaries, bonuses, and other financial rewards that can help you build wealth over time.
Seek professional financial advice
No matter where you are on your wealth-building journey, finding a trustworthy professional to help you can accelerate your journey to financial independence and generational wealth building.
Lima agreed, saying that “seeking professional financial advice can be an important step in building wealth. A financial advisor can help you develop a personalized plan to achieve your financial goals and can provide guidance and support along the way. This can be especially important if you’re just starting out or facing complex financial challenges.
Conclusion
Building wealth takes time, patience, consistency and, above all, a willingness to invest in yourself and in the market. It is a multi-faceted undertaking worth pursuing.
Lima puts it this way: “Overall, creating wealth takes time and effort, but it’s achievable if you’re willing to put in the effort. By saving and investing, living below your means, starting a business, investing in real estate, building a diversified investment portfolio, furthering your education and personal development, and seeking professional financial advice , you can build a solid financial foundation and achieve your long-term goal. goals.”
More from GOBankingRates
This article originally appeared on GOBankingRates.com: I’m a Financial Planning Expert: Here are the 7 Best Ways to Build Wealth