New Investor's Guide to Building Wealth
If you have the right mindset and strategy, building wealth can be one of the most enjoyable and rewarding experiences in your life. The prosperity that comes from wealth accumulation means having control of your time, freedom from worry about meeting your needs, assurance that you will always have a full pantry, heat in the winter, nice clothes, and money for entertainment. Affluence means being able to send your children and grandchildren to college; to establish trust funds and UTMAs. In short, when you are wealthy, money becomes a tool; nothing more and nothing less. It works for you. You don't work for it.
To help you on your journey to build wealth, we've put together some resources that you can work your way through sequentially. This foundation should give you a decent view of the process, challenges, and strategies you might employ to grow your net worth. We recommend you use this page as your base, following each linked article, studying it, and then returning to move on once you feel comfortable that you've mastered the topic.
Building Wealth Starts With Saving Money
To understand your wealth building goals, you need to study statistics and find out exactly how much money it takes to be considered "rich" in the United States. You might be surprised at how small the amount is compared to the images you see on television or in the movies. You can then compare this to the amount of money sociologists claim it takes to maximize personal happiness in the United States. Taken together, this will let you come up with "your number". That number is the total wealth you need to accumulate to afford the lifestyle you desire, living off your investment income alone but we're getting ahead of ourselves.
Once you have your number, it's time to start saving. This might seem simplistic but building wealth begins with the savings habit. The secret to making money is realizing there are only two levers you can pull. As you adjust those two levers, you can use the surplus to grow your cash reserves; cash reserves that ultimately get deployed into productive assets.
Buying Productive Assets That Generate Passive Income
Once you have a surplus, you need to put it to work in productive assets; things that throw off passive income that comes in all hours of the day without you having to sell your time. Passive income doesn't discriminate. It doesn't know if you are young or old, black or white, gay or straight, conservative or liberal, religious or agnostic, male or female. Passive income is the secret separating the wealthy from everyone else. The rich have to work for their money. Though they often choose to work, the wealthy don't need to do so. They could sit back and collect gushers of endless checks from the vast estates they've acquired. A wealth manager could help you figure out the best way to continue growing your wealth.
To learn more about the basics of the different types of assets you might accumulate in your quest to build wealth, check out these articles:
Learning To Pay the Lowest Taxes You Can Is an Important Part of Building Wealth
As you accumulate assets, you are going to want to learn about different tax strategies that allow you and your family to keep more of your cash flows and net worth. This includes everything from specific tax strategies to tax shelters such as Congressionally-designed retirement plans. These articles will help you understand some of the basics:
- How to Pay No Taxes on Your Dividends or Capital Gains
- Investing in Tax-Free Municipal Bonds
- 3 Reasons To Consider Investing in Municipal Bonds for Tax-Free Passive Income
- How to Use the Asset Placement Tax Strategy to Build Wealth
- 7 Ways to Lower Your Family's Investment Tax Burden
- Using Deferred Taxes to Increase Your Investment Returns
- Capital Gains Tax Guide for New Investors
- Using an Individual Roth 401(k) To Build Wealth
- Why the Roth IRA Is the Perfect Tax Shelter for Building Wealth
- How Small Business Owners Can Use a SIMPLE IRA to Build Wealth
- Using a 401(k) Plan to Build Retirement Wealth
- Using a 403(b) Plan to Build Retirement Wealth
- Tax Advantages of Investing in Series EE Savings Bonds
Additional Resources You May Want to Study When Learning to Build Wealth
Finally, there are some other general philosophy articles about building wealth and getting rich you are going to want to read:
- 7 Rules of Building Wealth and Amassing Money
- 7 Ways to Destroy Your Wealth and Guarantee You Spend Your Life in Poverty
- How to Get Rich from Your Investment Portfolio
- Tips for Making Money and Building Your Net Worth
- 10 Secrets of the Capitalist Class
- How to Become Wealthy
- Yes, Virginia, you Too can Be Rich - A Guide for New Female Investors Who Want to Build Wealth
- Six Steps to Build Wealth and Retire Rich
- 3 Secrets to Building a Great Fortune
- How Scrooge McDuck Taught Me To Build Wealth
Accumulating good assets that are structured intelligently and throw off fresh funds for you to spend, reinvest, save, gift, or donate, empowering you to arrange your day doing what it is you enjoy, and spending time with the people you love, rather than selling more hours of your life.