Wealth Creation is Not a Phase

January 18, 2019

coins representative of building wealth

Wealth creation strategies should be pursued throughout your lifetime, whether you are just starting, or comfortable in retirement. There are some strategies that are considered wealth creation that may apply to your wealth management plan. In this article, I will not be talking about how to become an Uber driver or freelance writer for extra money. I assume you are working full time and are looking for real strategies to increase your passive income, reduce expenses, manage your cash-flow and increase wealth through conservative investment options.

Increase Your Awareness

The first step is understanding, even if you are affluent or have a secure income, there are ways to increase your wealth, protect it or diversify your sources of wealth to ensure its longevity. Wealth can disappear if you are not a good steward. You can generally think of wealth creation as having five areas that you can improve:

  1. Diversifying income sources
  2. Reducing expenses
  3. Enhancing Assets
  4. Managing liabilities
  5. Managing your risks

Incorporating Effective Strategies

In each area, you can put in place strategies that will help you expand your ability to create wealth or limit the downside to risks or liabilities. As an investor, there are investment strategies that are applicable as well.

Diversifying Income Sources – the wealthiest in society on average have seven different sources of income. These include earned, profit, interest, dividend, rental, capital gains and royalty income. If you are not employing dividend stocks as part of your portfolio, it may be time to diversify your income.

Reducing Expenses – generally, this comes down to the lifestyle you want to live and managing that expectation versus being able to maintain that lifestyle over the life of your savings and income. It’s wise to look at your largest expense in life and see if it can be downsized. Creating and updating a budget annually at a minimum can help as well.

Enhancing assets – an asset is something that adds value (money) to your bottom line. Most lifestyle goals such as travel or vehicles do not qualify. There is a balancing act between your most wanted desires and maintaining your progress in building or expanding your wealth.

Managing Liabilities – always negotiating interest rates or using the right debt instrument to manage financing is a great way to limit the drain these products can have on your wealth. You may also rethink large purchases that require a large loan that only drain on your finances.

Managing Risk – ensuring proper protection for you, your loved ones and your business should be an important tool. Life insurance, key person insurance and other insurance products can help protect you against unexpected life occurrences. Managing investment risk should be actively discussed with your Investment Advisor. Every person’s risk tolerance is different, but you should always err on the side of caution when it comes to your investments.

Talk to a Financial Planning Expert

By talking about each of these wealth creation factors with your financial advisor you can start enhancing your ability to limit the drains on your wealth building and increase the effectiveness of your wealth creation.

Feel free to contact Steve McBride, Investment Advisor, Echelon Wealth Partners regarding any questions you may have on this content.

 

Disclaimers

This blog is solely the work of Steve McBride for the private information of his clients. Although this author is a registered Investment Advisor with Echelon Wealth Partners Inc. (“Echelon”) this is not an official publication of Echelon, and this author is not an Echelon research analyst. The views (including any recommendations) expressed in this newsletter are those of this author alone, and they have not been approved by, and are not necessarily those of, Echelon.

Echelon Wealth Partners Inc. is a member of the Investment Industry Regulatory Organization of Canada and the Canadian Investor Protection Fund.

Forward-looking statements are based on current expectations, estimates, forecasts and projections based on beliefs and assumptions made by authors. These statements involve risks and uncertainties and are not guarantees of future performance or results and no assurance can be given that these estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.

The opinions expressed in this report are the opinions of this author and readers should not assume they reflect the opinions or recommendations of Echelon Wealth Partners Inc. or its affiliates. Assumptions, opinions and estimates constitute this author’s judgment as of the date of this material and are subject to change without notice. We do not warrant the completeness or accuracy of this material, and it should not be relied upon as such. Before acting on any recommendation, you should consider whether it is suitable for your particular circumstances and, if necessary, seek professional advice. Past performance is not indicative of future results.

These estimates and expectations will prove to have been correct, and actual outcomes and results may differ materially from what is expressed, implied or projected in such forward-looking statements.

Sources:

https://www.learncfds.com/real-wealth-creation-strategies-what-cycle-are-you-in/

https://www.linkedin.com/pulse/7-income-streams-most-millionaires-manoj-arora