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The meaning of wealth building varies depending on the personal objectives of each individual. It mostly relies on the objectives and desires of the individual. For some, having sufficient wealth—that is, income, capital, and possessions—may be what allows them to enjoy time, freedom, and returns. It can mean having a lot of money for some people, enough to feed whole generations.

The primary distinction between being rich and affluent is that the former refers to a person’s condition of riches up until it runs out. Rich people will always have enough money to meet their necessities, and their investments will yield steady returns to help them achieve their objectives. But there isn’t a certain wealth-building tool that can turn someone into a millionaire.

People ought to know exactly what their short- and long-term objectives are. It is consequently crucial to have a plan for accumulating wealth. The goals, strategies, and timetables for achieving them will all be conceptualized in the plan. People need to use a variety of wealth-building techniques to create the ideal plan. Similar to other financial plans, these programs entail investing, which carries a certain amount of risk.

For this reason, caution should be used when creating these plans. During the 30s, 40s, and 50s, people usually start earning, saving, and accumulating wealth with the goal of retiring comfortably by the age of 60. Some would prefer to retire much ahead of the majority of people. They ought to modify their wealth-building plans appropriately.

Table of Content

  • Why is Wealth Accumulation Important?
  • Setting the Foundation for Wealth Accumulation
  • Strategic Income Generation
  • Smart Investing for Long-Term Growth
  • Real Estate as a Wealth Building Tool
  • Debt Management and Wealth Accumulation
  • Tax Planning for Wealth Preservation

Why is Wealth Accumulation Important?

Accumulating wealth involves cutting expenses, saving, investing, creating multiple income streams, etc. All these steps are taken with one focus—to live a financially stable, independent life. Working all through one’s life will not lead to financial freedom. The money invested has to create more money to achieve it. This will help in early retirement. The earlier an individual retires, the less financial stress they have to go through. It also creates assets that one can pass down to future generations. It also helps individuals achieve their goals and aspirations according to their timelines. This gives them a sense of satisfaction and helps them live a contented life.

Mindset Needed for Wealth Accumulation

Nearly everyone considers money and strives to increase their income. Only a small percentage of people are wealthy, though, and many more are on their way. Prioritize changing your thinking if you also want to be the one to improve your family’s financial situation.

You must give yourself exposure to all the opportunities that can make you rich. Here are 5 financial mindsets that help you take the first step towards richness:

  • Buying assets, not liabilities

The idea behind this principle is that by acquiring assets, you can build wealth over time and become financially independent, while liabilities create additional expenses and can lead to financial difficulties. To put it simply, you want to own things that put money in your pocket, not things that take money out.

  • Take calculated risks

Rich people are more obsessed with taking calculated risks and booking the opportunities that they can grab at the peak of time. But, the only thing that a good mindset needs to improve is taking calculated risks. As a poor mindset, we miss out on opportunities by being too conservative when it comes to investing.

  • Focus on earning passive income

Rich people work towards generating income sources in which they do not have to spend a significant portion of time after a period. Passive income sources like dividend yield investments or rental income. If you also want to become rich, you build a portfolio (professional and investment-related) in a way that requires less active time.

  • Understand leverage

A chef in a reputed restaurant is not handling everything from managing the kitchen to cutting vegetables and serving them to the customers. A chef will do what he or she is good at, i.e., cooking. Similarly, learn how to leverage delegation. Do what is not done by others or requires particular expertise. Everything else can be delegated to others with relevant skills. It helps in saving time for upskilling yourself to earn more.

  • Outcome-based decision

When you talk about finance, rich people never make any financial decisions on the basis of a relative’s advice or under the influence of emotions. If you want to become rich, you should start learning how to make calculated financial decisions.

For example, buying a car should be based on a balance of emotional reasons, i.e., favorite model, and financial reasons, i.e., it is economical for you, wouldn’t take a lot of maintenance charges, and is comfortable according to the region you live in. It can be done by making comprehensive comparisons between similar car models.

Setting the Foundation for Wealth Accumulation

Many individuals want to accumulate wealth, yet it can sometimes seem like an impossible endeavour. Beware of schemes and possibilities that seem too good to be true or get-rich-quick schemes that could lead you down a bad path because achieving this objective will require time, discipline, and effort.

The good news is that everyone can, with the right guidance and tactics, accumulate and protect wealth over time. Furthermore, your chances of success increase with the earlier you begin using these.

We’ve listed a number of important guidelines for accumulating wealth below, including creating a strategy and setting goals, managing debt, investing in education and training, saving and investing, safeguarding your assets, comprehending the effects of taxes, and establishing a solid credit history. We’ll examine each of these ideas in more detail in this post and see how they might support you in reaching your financial objectives.

1. Understand your net worth

To gain a comprehensive understanding of your financial picture, it is crucial to calculate both your assets and liabilities. By evaluating the value of your assets in relation to your liabilities, you can obtain a clearer and more detailed picture of your overall financial health. This assessment will enable you to make informed decisions and take appropriate actions to improve your financial well-being.

2. Set financial goals

To set yourself up for success, it’s important to define specific and tangible goals that you want to achieve. These goals can vary depending on your aspirations and priorities, such as saving diligently for a comfortable retirement, working towards purchasing your dream house, or embarking on the exciting journey of starting your own business. By having clear and well-defined objectives, you can stay focused and motivated on your path to success.

3. Earn income

To boost your income, it’s important to prioritize career advancements, explore side hustles, or venture into smart investments. By focusing on these avenues, you can potentially increase your financial resources and pave the way for greater financial stability and success.

4. Save money automatically

To establish a solid savings habit, consider setting up automatic transfers to a dedicated savings account, or even an investment account. By automating this process, you can ensure consistent and disciplined saving, allowing your money to grow over time. This simple, yet effective strategy can help you achieve your financial goals and build a secure future.

5. Spend money consciously

To effectively manage your finances, it’s important to track your expenses diligently. By prioritizing needs over wants, you can make informed decisions about your spending. Look for opportunities to cut unnecessary costs, such as reducing discretionary spending or finding more affordable alternatives. By doing so, you can save more money and build a stronger financial foundation for the future.

6. Pay off high-interest debt

It is important to prioritize paying off debts with high interest rates as this strategy can help you save a significant amount of money overall. By focusing on these debts first, you can reduce the overall interest paid and accelerate your journey towards financial freedom. This approach allows you to allocate more funds towards other financial goals and investments, ultimately improving your financial well-being.

7. Invest in your education and career

Continuously invest in yourself by actively seeking out opportunities to acquire new skills and knowledge. By doing so, you can broaden your horizons, stay relevant in a rapidly changing job market, and position yourself for better job opportunities and higher earning potential. Remember, personal growth and development are ongoing journeys that can lead to greater fulfillment and success in both your personal and professional life.

8. Start saving and investing early

The power of compounding, which is the ability of an investment to generate earnings that are reinvested to generate even more earnings, can have a profound and lasting impact on your wealth accumulation over time. By harnessing the potential of compounding, you can watch your wealth grow exponentially as your investments continue to generate returns and those returns, in turn, generate more returns. Don’t underestimate the power of compounding when it comes to building a strong financial foundation for the future.

9. Create a budget and stick to it

To effectively manage your finances and achieve your financial goals, it is crucial to establish a well-defined budget. Take the time to carefully analyze your income, expenses, and savings targets. Consider factors such as monthly bills, debt payments, and discretionary spending. By creating a detailed budget that aligns with your specific financial objectives, you can ensure a solid financial foundation and maintain consistency in managing your money.

10. Protect yourself and your assets

It is important to carefully consider various insurance options available to safeguard yourself against unforeseen events that have the potential to significantly impact your financial security. Whether it’s protecting your home from natural disasters, insuring your vehicle against accidents, or ensuring your health and well-being with comprehensive medical coverage, having the right insurance in place can provide peace of mind and protect you from potential financial hardships.

Strategic Income Generation

Having a variety of revenue sources is essential. By doing this, you may improve financial stability, reduce risks, and open up opportunities for long-term growth. Entrepreneurs who rely exclusively on one revenue stream run the risk of their firm failing due to factors such as shifting consumer tastes, market changes, and unforeseen disruptions. You can lessen their reliance on any one source of income by diversifying their sources, spreading risk, and guaranteeing a steady revenue flow even during erratic periods.

Below are some strategies to generate income for wealth accumulation:

Diversifying Income Streams

Expand your business investments: Diversify your business’s income streams by investing in different asset classes relevant to your industry. Consider allocating resources towards acquiring stocks, real estate properties, bonds, or other businesses that complement your core operations. This diversification can help reduce risks and optimize your potential returns.

Explore new business ventures or partnerships: In addition to your primary business, explore opportunities to start new ventures or establish strategic partnerships. Look for areas where your expertise or resources can be leveraged to generate additional revenue streams. This could involve launching a subsidiary company, forming joint ventures, or collaborating with complementary businesses.

Create licensing or franchising opportunities: Develop passive income streams by licensing your intellectual property or franchising your business model. This allows you to generate revenue from licensing fees or royalties while leveraging the efforts and investments of others to expand your brand reach and increase cash flow.

Diversify your product or service offerings: Explore new markets or expand your product/service line-up within your existing business. Identify customer needs or market gaps that align with your core competencies and develop new offerings accordingly. By diversifying your offerings, you can attract a broader customer base and generate additional revenue streams.

Invest in income-generating business assets: Seek out business assets that generate regular cash flow, such as rental properties, equipment leasing, or licensing agreements. Evaluate opportunities to invest in income-oriented businesses or assets that can provide a steady stream of revenue to complement your core business operations.

As Robert Kiyosaki advises, relying solely on a single source of income can leave your financial stability vulnerable. To safeguard your cash flow, it’s crucial to diversify your income streams. By implementing these strategies, you can proactively protect your cash flow, create financial stability, and enjoy the freedom that comes with diversified income streams.

Career Development

Every job demands a certain set of technical and workplace skills, and you probably already have a strong skill set from your training or previous employment. According to a 2022 McKinsey & Company analysis, high-income skills are abilities and knowledge that employers often regard highly and may make it simpler to change careers or even industries. Even though these are uncommon employment abilities, they are frequently essential to operating a profitable company.

You might wish to look for methods to showcase your high-paying abilities as you look to progress in your work or change the direction of your career. You might be able to use these abilities to help you meet your wage objectives, depending on the kind of work you choose to pursue.

Below, you’ll find seven high-income skills that you can feature on your resume to help stand out to potential employers.

  • 1. Data analysis

Analytical thinking and innovation is the top skill forecasted in the World Economic Forum’s Future of Jobs Report. As businesses across industries increasingly rely on data to make informed decisions, they require more employees with the ability to collect, interpret, and share data that can solve their business problems.

People skilled in data analysis may use a range of tools including Microsoft Excel, Google Sheets, SQL, Tableau, R, or Python.

  • 2. Software development

Increasingly, industries are turning toward technology to advance their business capabilities, and they need people skilled in developing, maintaining, and improving their technological systems. People who work in DevOps or software engineering build, monitor, and control an organization’s technology.

People skilled in DevOps or software engineering may use tools like Git, Docker, Jenkins, or Kubernetes, and may know coding languages like Python, Java, or C++.

  • 3. User experience

Hand in hand with technological development comes user experience (UX), which has to do with the way a consumer interacts with a product. People working in UX figure out the best way to present a product to consumers. They may conduct research, design, or help market a product.

Although they still involve some data, UX roles are grounded in design and tend to offer room for creativity, and they require a high level of social perceptiveness—three skills that come up in multiple skill reports

  • 4. Web development

Web development brings together the fundamentals of software development and user experience, incorporating the technical aspects of the former with the design elements of the latter. People skilled in web development will also be familiar with technical search engine optimization (SEO) in order to design and program websites that meet business needs.

  • 5. Project management

Many companies use an organizational structure in which different departments, teams, or team members all work on a singular product or project. A person who is skilled in coordinating efforts across each of those touchpoints is skilled in project management. These team members may be responsible for maintaining schedules, organizing budgets, and communicating with project stakeholders (or various parties interested or invested in the project outcomes).

You can consider “project management” to be a catch-all term for leadership, communication, planning, resilience, and organizational skills—all of which are frequently cited as valuable to employers.

  • 6. Account management

While project management typically has an internal focus, account management taps into a similar subset of skills to work with people outside of your organization. Often highly valued in sales positions, account management skills enable you to confidently position your company and its products to customers.

Account management skills incorporate both the organizational aspects required to close a business deal as well as the interpersonal skills required to productively negotiate and maintain relationships. They often work with a customer relationship management (CRM) tool like Salesforce.

  • 7. Content creation and management

Content creation and management skills involve storytelling and are often crucial for marketing careers. This skill set incorporates creativity, originality, social perceptiveness, and emotional intelligence. Taking these skills a step further can also mean adding data analysis to your toolbox, specifically honing in on marketing analytics so that you can assess how well an audience is connecting with your content.

Entrepreneurship in Wealth Accumulation

Each entrepreneur makes a different option when starting a small business for personal reasons. It generally takes a few questions to get to the real reason behind their enterprise launch, but in the end, it all comes down to making money and building wealth.

In this sense, entrepreneurship is an effective means of generating money since it allows people to have a certain amount of autonomy and self-determination over their lives in addition to the possibility of earning an infinite amount of wealth.

We’ll examine the core ideas that underpin entrepreneurship as a means of generating wealth.

Paths to Wealth Creation
Creating wealth should be viewed as a lifelong journey rather than a life event, which can be achieved by following either of the four main pathways. These paths include inheriting wealth, saving and investing, pursuing a high-paying career, or entrepreneurship. Each path offers its own unique opportunities and challenges that affect the amount of wealth accumulated and the time it takes to do so.

Entrepreneurship is considered one of the most potent paths to wealth creation. It is open to individuals of all ages, educational backgrounds, and demographics. The value of a business can increase significantly over time, leading to the accumulation of substantial wealth. However, entrepreneurship also carries risks, such as financial risk and the possibility of business failure.

Wealth Creation – Begin with the End in Mind
Most books and articles on entrepreneurship will tell you that the first step in entrepreneurship is idea generation. However, for anyone considering starting a new business venture, a wise first step should involve thinking through and defining their wealth goals and objectives.

As an entrepreneur, creating wealth means building a profitable business that generates profits for the owner and increases in value over time. This can be achieved through ongoing profits and selling the business or shares for a substantial profit. It’s essential to define your expectations for the business, such as whether it will be a side hustle or full-time, how much income is needed to support your personal budget, and if it will create wealth beyond living expenses for future investments like buying a house, funding retirement, or paying for your children’s college expenses.

Once you have defined wealth goals, you now have a benchmark for assessing the economic viability of the new business venture.

Idea Generation and Validation
Creating a viable business idea requires more than a random thought or just turning a hobby into a business. It involves thoroughly identifying a market gap and understanding potential customers’ needs and preferences. The biggest mistake a new business owner can make is trying to sell a product or service without truly understanding the target market’s needs, preferences, and willingness to buy.

Once you have an idea, you must validate it. Validation requires market research to ensure sufficient demand for your product or service to generate satisfactory revenue and profit to support the entrepreneur’s wealth goals and objectives.

Aligning Business Goals with Personal Wealth Goals
The vast majority of micro-small business owners operate without any form of business plan; many do so without the benefit of well-prepared financial projections. Some take pride and even boast of “flying by the seat of their pants.” Unfortunately, the statistics related to small business failure suggest that a well-structured business plan is essential to long-term business success and sustainability.

However, for the entrepreneur to create wealth from the business enterprise, the business plan must be aligned with the owner’s personal wealth goals and objectives. The plan outlines your business goals, strategies for achieving them, and the resources required. A robust business plan includes market analysis, financial projections, and an operational plan.

Balancing Business and Personal Financial Health
An essential aspect of achieving financial success through entrepreneurship is ensuring the business can scale and grow beyond providing just enough income to support the owner’s family. The growth and scaling of any business should result from proper planning, including a capital budgeting plan. Several small businesses become insolvent every year when they experience unplanned or unexpected growth. My father once told me, “… an opportunity is only an opportunity if you are in a position to take advantage of it.”

Obtaining capital is crucial for any business to reach its growth objectives. Capital readiness involves planning and addressing the business’s and the owner’s financial health. If the owner’s financial health is unstable, it can negatively affect the business’s financial health and vice versa. Ultimately, obtaining a business loan results from careful capital planning and management to achieve the desired growth and success.

Tips for Starting and Growing a Successful Business

From marketing to hiring the right staff, managing and expanding your small business can present many difficulties for you as the owner. These pointers can assist you in expanding and growing a profitable business:

  • 1. Identify your mission

Is your mission to provide a unique service? A low-cost item? Or to be environmentally friendly? Successful businesses have a mission, even if it’s simply to provide customers with the best value possible. Writing your intent in a mission statement defines your business’s mission and acts as a blueprint for a successful business. Periodically, revisit your original business plan and mission statement to ensure you are on the right path.

  • 2. Create goals

Create both short- and long-term goals and understand the reasoning behind each to help guide your success. As part of an effective strategic plan, business goals should be SMART, meaning they are specific, measurable, achievable, relevant, and time-based. They can be financial, operational, or even growth-related. Maybe a goal for one business owner is to sell a specific number of units per month over a year to drive up sales, while for another it’s to ramp up marketing efforts and gain a target number of social media followers. 

Goals can be reassessed, so there’s flexibility to create and adjust your business roadmap. Successful entrepreneurs monitor progress and look at the numbers behind their businesses to analyze the data and check if progress is being made toward their goals. You can also break your goals into steps to make them more attainable. If you get stuck at this step, consider hiring a business coach to help create long-term positive habits.

  • 3. Build a strong team

A strong team is inclusive, collaborative, and reliable, and is essential to building a successful business. Research from a 2020 McKinsey & Co. report, Diversity Wins, shows that assembling a team diverse in age, gender, and ethnicity, among other factors, increases productivity. The most effective teams encourage feedback and welcome a diversity of opinions, which can spur creativity and help with problem-solving. 

Read Also: Creating a Multigenerational Investment Portfolio: Diversification For Long Term Wealth Growth

If you’re an entrepreneur who typically follows the school of thought, “If you want it done right, do it yourself,” remember: Your team is there for support, and each member offers unique skills that can help in your business’s growth. 

  • 4. Ensure customer satisfaction

Happy customers often become repeat buyers, spreading the word about their favorite stores, designers, apps, platforms, or services. Besides the value proposition of a particular product or service that makes the business loved, it’s often great customer service and knowing how to improve it that keeps customers returning. Ensure customer satisfaction in the following ways:

  • Create an easy return policy. Explicitly stated policies reduce confusion and unsatisfactory customer experiences. 
  • Be honest with customers. Honesty goes a long way in building trust and customer loyalty. When a business makes a mistake, it’s best to accept responsibility and be honest about what you can do to fix the problem in a timely manner. 
  • Stay solution-oriented. When customer conflicts arise, remain polite, patient, and use positive language to help de-escalate the situation so it’s easier to find a resolution.
  • 5. Make the best product/service possible

A delicious edible item, gorgeous wearable piece of art, or delightful service will likely organically attract a target audience of consumers who become repeat customers. Making and offering an excellent product or service with a high-value proposition helps give you a competitive advantage. By reading business books, studying your respective industry and competitors, and listening to entrepreneur podcasts by industry experts and successful entrepreneurs, you can gain valuable insights into bettering your offerings and finding business success.

  • 6. Implement marketing strategies

Marketing is key for mapping your business journey, including tracking goals through KPIs to measure your success. Implementing multiple marketing strategies—from paid advertising to robust social media advertising—strengthens brand awareness, which is a core driver of sales. A small-business owner might act as a de facto marketing director early in the business, thinking they are saving money. However, hiring a marketing consultant can be helpful in devising a more concrete plan. 

  • 7. Be Consistent

Consistency is a key component to success in business. You have to keep doing what is necessary to be successful, day in and day out. This will create long-term positive habits that will help you make money in the long run and create satisfied customers from day one. Customers value consistency, too.

  • 8. Prepare to Make Some Sacrifices

Having your own business often requires putting in more time than if you were working for someone else. That can mean spending less time with family and friends than you wish you could. The adage that there are no weekends and no vacations for business owners can ring true for anyone who’s committed to making their business work.

Owning a business isn’t for everyone. If, after an honest self-evaluation, you decide you aren’t cut out for it, you’ll save yourself a lot of grief, and probably a lot of money, by pursuing another career path.

Smart Investing for Long-Term Growth

Investing is one of the finest ways to safeguard your financial future, and long-term investing is one of the best strategies to do so. Even while it could be alluring to switch up your assets every day, going long-term is a tried-and-true tactic that many investors can profit from. We’ve compiled a list of some of the best long-term investments for your portfolio.

1. Growth stocks

Overview: In the world of stock investing, growth stocks are the Ferraris. They promise high growth and along with it, high investment returns. Growth stocks are often tech companies, but they don’t have to be. They generally plow all their profits back into the business, so they rarely pay out a dividend, at least not until their growth slows.

Who are they good for?: If you’re going to buy individual growth stocks, you’ll want to analyze the company carefully, and that can take a lot of time. And because of the volatility in growth stocks, you’ll want to have a high risk tolerance or commit to holding the stocks for at least three to five years.

Risks: Growth stocks can be risky because investors will pay a lot for the stock relative to the company’s earnings. So when a bear market or a recession arrives, these stocks can lose a lot of value very quickly. It’s like their sudden popularity disappears in an instant. However, growth stocks have been some of the best performers over time.

Rewards: The world’s biggest companies – the Alphabets and the Amazons – have been high-growth companies, so the reward is potentially limitless if you can find the right company.

2. Stock funds

Overview: A stock fund contains a collection of stocks, often unified by a specific theme or categorization, such as American stocks or large stocks. The fund company charges a fee for this product, but it can be very low.

Who are they good for?: If you’re not quite up for spending the time and effort analyzing individual stocks, then a stock fund – either an ETF or a mutual fund – can be a great option. A stock fund is an excellent choice for an investor who wants to be more aggressive by using stocks but doesn’t have the time or desire to make investing a full-time hobby.

Risks: A stock fund is less risky than buying individual positions and less work, too.

But it can still move quite a bit in any given year, perhaps losing as much as 30 percent or even gaining 30 percent in some of its more extreme years.

If you buy a fund that’s not broadly diversified – for example, a fund based on one industry – be aware that your fund will be less diversified than one based on a broad index such as the S&P 500. So if you purchased a fund based on the chemicals industry, it may have a lot of exposure to oil prices. If oil prices rise, then it’s likely that many of the stocks in the fund could take a hit.

Rewards: A stock fund is going to be less work to own and follow than individual stocks, but because you own more companies – and not all of them are going to excel in any given year – your returns should be more stable. With a stock fund, you’ll also have plenty of potential upside.

If you buy a broadly diversified fund – such as an S&P 500 index fund or a Nasdaq-100 index fund – you’re going to get many high-growth stocks as well as many others. But you’ll have a diversified and safer set of companies than if you own just a few individual stocks.

By buying a stock fund, you’ll get the weighted average return of all the companies in the fund, so the fund will generally be less volatile than if you had held just a few stocks.

3. Bond funds

Overview: A bond fund – either as a mutual fund or bond ETF – contains many bonds from a variety of issuers. Bond funds are typically categorized by the type of bond in the fund – the bond’s duration, its riskiness, the issuer (corporate, municipality or federal government) and other factors. When a company or government issues a bond, it agrees to pay the bond’s owner a set amount of interest annually. At the end of the bond’s term, the issuer repays the principal amount of the bond, and the bond is redeemed.

Who are they good for?: Bond funds are good for investors who want a diversified portfolio of bonds without having to analyze and buy individual bonds. They’re also good for individual investors who don’t have enough money to buy a single bond, which usually costs around $1,000, and bond ETFs can often be purchased for less than $100.

Risks: While bonds can fluctuate, a bond fund will remain relatively stable, though it may move in response to movements in the prevailing interest rate. Bonds are considered safe, relative to stocks, but not all issuers are the same.

Government issuers, especially the federal government, are considered quite safe, while the riskiness of corporate issuers can range from slightly less to much riskier.

Rewards: A bond can be one of the safer investments, and bonds become even safer as part of a fund. Because a fund might own hundreds of bond types, across many different issuers, it diversifies its holdings and lessens the impact on the portfolio of any one bond defaulting.

The return on a bond or bond fund is typically much less than it would be on a stock fund, perhaps 4 to 5 percent annually but less on government bonds. It’s also much less risky. If you’re looking for a bond fund, there’s a variety of fund choices to meet your needs.

4. Dividend stocks

Overview: Where growth stocks are the sports cars of the stock world, dividend stocks are sedans – they can achieve solid returns but they’re unlikely to speed higher as fast as growth stocks. A dividend stock is simply one that pays a dividend — a regular cash payout. Many stocks offer a dividend, but they’re more typically found among older, more mature companies that have a lesser need for their cash.

Dividend stocks are popular among older investors because they produce a regular income, and the best stocks grow that dividend over time, so you can earn more than you would with the fixed payout of a bond. REITs are one popular form of dividend stock.

Who are they good for?: Dividend stocks are good for long-term buy-and-hold investors, especially those who want less volatility than average and who enjoy or need a cash payout.

Risks: While dividend stocks tend to be less volatile than growth stocks, don’t assume they won’t rise and fall significantly, especially if the stock market enters a rough period. However, a dividend-paying company is usually more mature and established than a growth company and so it’s generally considered safer.

That said, if a dividend-paying company doesn’t earn enough to pay its dividend, it will cut the payout, and its stock may plummet as a result.

Rewards: The big appeal of a dividend stock is the payout, and some of the top companies pay 3 or 4 percent annually, sometimes more. But importantly they can raise their payouts 8 or 10 percent per year for long periods of time, so you’ll get a pay raise, typically each year.

The returns here can be high, but won’t usually be as great as with growth stocks. And if you’d prefer to go with a dividend stock fund so that you can own a diversified set of stocks, you’ll find plenty available.

5. Real estate

Overview: In many ways, real estate is the prototypical long-term investment. It takes a good bit of money to get started, the commissions are quite high, and the returns often come from holding an asset for a long time and rarely over just a few years. Investing in real estate can be an attractive strategy, in part because you can borrow the bank’s money for most of the investment and then pay it back over time.

Who are they good for?: For those who want to be their own boss, owning a property gives them that opportunity, and there are numerous tax laws that benefit owners of property especially. That said, while real estate is often considered a passive investment, you may have to do quite a bit of active management if you’re renting the property.

Risks: Any time you’re borrowing significant amounts of money, you’re putting extra stress on an investment turning out well. But even if you buy real estate with all cash, you’ll have a lot of money tied up in one asset, and that lack of diversification can create problems if something happens to the asset.

And even if you don’t have a tenant for the property, you’ll need to keep paying the mortgage and other maintenance costs out of your own pocket.

Rewards: While the risks can be high, the rewards can be quite high as well. If you’ve selected a good property and manage it well, you can earn many times your investment if you’re willing to hold the asset over time.

If you pay off the mortgage on a property, you can enjoy greater stability and cash flow, which makes rental property an attractive option for older investors.

6. Roth IRA

Overview: A Roth IRA might be the single best retirement account around. It lets you save with after-tax money, grow your money tax-free for decades and then withdraw it tax-free. Plus, you can pass that money on to your heirs tax-free, making it an attractive alternative to the traditional IRA.

Who are they good for?: A Roth IRA is a great vehicle for anyone earning income to pile up tax-free assets for retirement.

Risks: A Roth IRA is not an investment exactly, but rather a wrapper around your account that gives it special tax and legal advantages. So if you have your account at one of the best brokerages for Roth IRAs, you can invest in almost anything that fits your needs.

If you’re risk-averse and want a guaranteed income without any chance of loss, an IRA CD is a good option. This investment is just a CD inside an IRA. And inside a tax-friendly IRA, you’ll avoid taxes on the interest you accrue, as long as you stick to the plan’s rules.

You have almost no risk at all of not receiving your payout and your principal when the CD matures. It’s about as safe an investment as exists, though you’ll still have to watch out for inflation.

Rewards: If you want to kick it up a few notches, you can invest in stocks and stock funds and enjoy their potentially much higher returns – and do it all tax-free. Of course, you’ll have to endure the higher risks that investing in stocks and stock funds presents.

Real Estate as a Wealth Building Tool

Real estate investing has been a popular wealth-building strategy for centuries. It’s an asset class that has created some of the wealthiest individuals in the world. The power of real estate investing lies in the compounding effect it has on an investor’s wealth. Unlike other investments like stocks or bonds, real estate is a tangible asset that provides cash flow through rental income and appreciation over time.

It’s an investment that can potentially produce passive income for generations to come. From residential to commercial real estate, there are many ways to invest in the industry. What makes real estate investing even more powerful is the ability to leverage it. Borrowing money to invest in real estate can amplify returns, which is why many investors turn to this asset class to build wealth.

Homeownership vs. Real Estate Investment

Buying a home is a huge part of the American Dream. Choosing to buy or rent, though, is a major decision that affects your financial health, lifestyle, and personal goals. Whichever option you choose depends entirely on your lifestyle and financial situation. Both require a regular income (so you can afford the payments and associated costs) and may also require a certain degree of effort to maintain.

But there are several differences that make renting and owning property distinctly different. Renting a property doesn’t come with all the responsibilities associated with homeownership and you have more flexibility, as you aren’t necessarily tied down to your property. Owning your home gives you a sizeable investment, but it does come at a big cost—both upfront and over the long run.

Owning a home isn’t always better than renting, and renting is not always as simple as it seems. Here, we highlight some of the key differences between renting and buying.

  • Renting a Home

The biggest myth about renting is that you’re throwing away money every month. This is not true. After all, you need a place to live, and that always costs money in one way or another. While it’s true that you aren’t building equity with monthly rent payments, not all of the costs of homeownership always go toward building equity.

When you rent, you know exactly what your housing costs each month. This amount is indicated on your lease so you can plan accordingly. In some cases, your landlord may also include other costs within that amount, such as utilities, storage, and homeowner association (HOA) fees if you live in a condominium.

As a renter, you may face rent increases each time your lease is up for renewal. These rent increases can be even steeper if you live in certain parts of town. This may not be the case if you live in an area with rent ceilings and rent control, which limit how much a landlord can increase the rent, if at all.

Renting means you’re able to move whenever your lease ends. However, it also means you could have to move suddenly if your landlord decides to sell the property or turn your apartment complex into condos. Less dramatically, they could just bump up the rent to more than you can afford.

  • Owning a Home

Homeownership brings both tangible and intangible benefits. Not only do you have your own home, but you can make decisions about the look and design of the space, and you also get a sense of stability and pride of ownership.

Keep in mind, though, that changing your mind about where you’re living can be very expensive since real estate is an illiquid asset. You may not be able to sell when you want. And even if you do, you may not get it at the price you want, especially if the housing market is down. Even if it’s up, there are significant transaction costs associated with selling your property.

The overall cost of homeownership tends to be higher than renting even if your mortgage payment is lower than the rent. Here are some expenses you’ll be spending money on as a homeowner that you generally do not have to pay as a renter:

  • Property taxes
  • Trash pickup (some landlords require renters to pay this)
  • Water and sewer service (some landlords require renters to pay this)
  • Pest control
  • Tree trimming
  • Homeowners insurance
  • Pool cleaning (if you have one)
  • Lender-required flood insurance (in some areas)
  • Earthquake insurance (in some areas)

Mortgage interest can make up nearly all of your monthly payments in the early years of a long-term mortgage. It can take as many as 13 years before more of your payment goes toward the principal balance in a 30-year home loan. You’ll spend about $72,000 in interest for a $100,000 loan at 4% for 30-years. Admittedly, you’ll recoup some of that in tax deductions if you can itemize.

And let’s not forget repairs and maintenance, which can be very costly. You may find yourself with an unexpected leak in the roof. Replacing your roof could cost an additional $12,000, which may not be covered under your home insurance policy.

Real Estate Market Trends

  • Home Inventory Is Low but Growing

The real estate market has been dealing with low inventory for a while now. That just means there weren’t enough homes for sale to meet buyer demand—a real estate trend that only got worse during the craziness of 2020. But the trend may be taking a turn. Inventory has been moving upward since May 2022, and November saw the year’s largest month-over-month jump since then (and about 46% over the same time last year).

Still, the number of active home listings in November 2022 was around 38% lower than the pre-2020 levels of November 2017–2019. But don’t worry, we’ll walk you through what to expect if you decide to buy or sell soon.

  • Annual Home Values Are Still Rising

Yes, home prices are still going up year over year. The national median home price for active listings increased by 11% to $416,000 in November 2022 compared to November 2021. But that rate actually trails behind the average 16% annual growth rate seen in June and July—which may be a sign that the speed of home price growth is calming down. That means 2023 will probably be a pretty slow growth year.

And since there’s still strong buyer demand and a shortage of homes for sale, prices aren’t going to plummet. They’re dipping a bit from month to month (which is a normal seasonal trend for prices after they peak in early summer)—but they’ll still be higher than they were at the start of this year.

So, if you’re a seller, that should put a smile on your face. And hang tight, buyers—we have some advice for you too.

  • Mortgage Interest Rates Are Higher

The average mortgage interest rate (the interest fee lenders charge as a percentage of your loan amount) was lower than it’s ever been in 2021. But it’s gone up since then.

Because the Federal Reserve raised interest rates in 2022, the average rate for a 15-year fixed-rate mortgage jumped from 2.8% in January of 2022 to 6.36% in October—the highest it’s been in over 15 years! Meanwhile, the average rate for a 30-year fixed-rate mortgage reached 7.08% in October.

By the way, that’s a big reason we only recommend 15-year mortgages: They tend to have lower rates than 30-year mortgages, and since they end 15 years sooner, you’ll pay less interest over time. That’s a one-two punch when it comes to saving money!

  • Online Real Estate Services Are Growing

No doubt you’ve heard of real estate services like Zillow that let you browse or list homes for sale online. But did you know online services now offer to buy and sell your house for you?

Third-Party Buyers

Here’s how the new iBuying trend works: You tell companies like Opendoor about the house you want to sell. They buy it from you, pump some money into it to resell at a higher price, and handle all the home processing stuff like inspections, repairs and home showings.

These companies promise you less hassle and charge you pretty much the same as an agent commission for selling costs—but it’s not all rainbows and sunshine. Some of these companies include an additional service fee (icing on their cake), which may mean less profit for you.

Worst of all, you don’t get the benefit of working with a top-notch agent who actually knows the current real estate market in your area and could sell your home for more money.

  • Risky Buying Options Are More Accessible

Okay, let’s cover some of the other trendy and “creative” ways to purchase a home (beware!).


If you’re itching to buy a home but can’t quite afford it yet, some sellers like Divvy offer a rent-to-own agreement. In this (bad) deal, you agree to rent the home for a while—anywhere from several months to several years—before becoming the owner.

The “plus” side of rent-to-own is that you can get into a house fast without waiting to save a down payment (but you know how we feel about that). Also, you don’t have to qualify for a mortgage right away.

The downside of rent-to-own is that it makes your rent more expensive because some of your monthly payment will go toward future homeownership. With rent prices increasing across the country, now’s not the time to pay even more!

And if you later decide you don’t want to buy the house or something happens to break your contract (like you don’t get approved for the mortgage), you won’t get all those extra payments back. They’ll have been a waste! Plus, you may have to handle repairs and maintenance yourself, even while renting. Talk about a bad deal!

Bottom line: Rent-to-own is a seriously dumb way to get into a house, so don’t get taken in. If you can’t afford a home yet, don’t buy one. Keep saving for that down payment and wait until your financial ducks are in a row. It’ll happen sooner than you think if you’re willing to work at it!

Down Payment Loans

Another risky real estate trend to avoid is taking out a personal loan to fund a down payment. That’s the same as buying a home with 0% down. You borrow the entire cost of the house—except this way you borrow it from two different companies at two different interest rates (which means twice as many headaches).

Purchasing a home with no money is never a good idea. Remember, you want a down payment that covers at least 5% to 20% of the home’s value. Buying a house with anything less will keep you from reaching other financial goals because you’ll have to pay too much extra in interest and fees. Thankfully, not many mortgage lenders allow you to do this—and it can even disqualify you from getting the mortgage you need.

Rental Income and Property Management

Maximizing rental income is one of the main objectives for landlords and property owners when it comes to property management. Property managers may make sure that their rental properties are yielding the best return on investment by putting into place efficient plans and practices.

  • Set Competitive Rental Rates

Setting the right rental rates is crucial for attracting quality tenants and maximizing your rental income. Conduct thorough market research to understand the prevailing rental rates in your area. Consider factors such as location, property size, amenities, and market demand. By pricing your rental property competitively, you increase the likelihood of attracting tenants quickly and minimizing vacancy periods, ultimately maximizing your rental income.

  • Maintain Property Condition

Maintaining your rental property in excellent condition is essential for attracting and retaining tenants while maximizing rental income. Regularly inspect the property, address maintenance issues promptly, and perform necessary repairs or upgrades. A well-maintained property not only enhances its appeal but also allows you to justify higher rental rates, as tenants are more willing to pay a premium for a well-cared-for property.

  • Screen Tenants Thoroughly

One of the most effective ways to maximize rental income is by selecting reliable and responsible tenants. Implement a comprehensive tenant screening process that includes background checks, credit checks, employment verification, and previous landlord references. By thoroughly vetting potential tenants, you minimize the risk of late payments, property damage, or eviction, ensuring a steady cash flow and protecting your rental income.

  • Implement Effective Lease Management

Proper lease management is crucial for maximizing rental income. Ensure that your lease agreements are clear, comprehensive, and enforceable. Include provisions for rent increases, late payment penalties, maintenance responsibilities, and lease renewal terms. Regularly review and update your leases to reflect any changes in local laws or regulations. By effectively managing your leases, you can protect your rental income and avoid potential disputes or legal issues.

  • Automate the process and use technology

Leveraging technology and automation can significantly streamline property management processes and optimize rental income. Consider using property management software to handle tasks such as rent collection, maintenance requests, and financial reporting. Automate rent reminders and payment processing to ensure timely rent collection. By embracing technology, you can reduce administrative burdens, minimize errors, and free up time for more strategic efforts to increase rental income.

One example of automation is the utilization of automated rent collection platforms. These systems automate rent reminders, payment processing, and late fee notifications, ensuring timely rent collection and minimizing delays. By reducing the administrative burden and improving payment efficiency, you can focus on maximizing your rental income and optimizing property performance.

Property managers have embraced technology to streamline operations and enhance efficiency. Some examples are:

  • Virtual tours, online portals, and e-document for lease signing have improved interactions between property management companies and renters.
  • Real-time communication through property management software has revolutionized staff, vendor, and tenant communication.

Debt Management and Wealth Accumulation

There are a number of debt management strategies that can be implemented to accelerate wealth accumulation involving cash flow, repayment and consolidation.

Good Debt vs. Bad Debt

While you’ll need to have a credit licence or be a credit representative to be able to recommend lending products, advisers who are not credit licenced are still able to advise on the cash flow implications of debt, assist clients with maximising the tax effectiveness of their debt, and accelerate the repayment of debt not associated with wealth creation.

There are a number of strategies to help clients reduce ‘bad’ debt and use ‘good’ debt to create wealth. ‘Bad’ debt is debt used to purchase anything that doesn’t generate income, something that loses its value, or has no value once it’s been used. It’s considered to be bad because:

  • a tax deduction cannot be claimed on the interest expense incurred, and
  • the debt doesn’t generate any income and the borrower has to use their own cash resources to repay the loan.

Examples include:

  • Credit and store cards – using these to pay living expenses can be inefficient if the outstanding balance isn’t paid in full within the interest free period (usually monthly). Interest charges are generally significantly higher than for other loans, making any ‘cheap’ purchases potentially expensive.
  • Personal loans – using a personal loan to buy a car or boat isn’t efficient. These assets don’t produce any income and the interest incurred usually isn’t tax deductible. The interest rate is also typically higher than that for loans secured against real property.
  • Home loans – although residential property generally increases in value over the long term, if the borrower lives in the home, they aren’t receiving income from it and they can’t claim the interest on the loan as a tax deduction.

‘Good’ debt on the other hand, is used to buy assets that generate income and also has the potential to increase in value, such as an investment property, managed funds or shares. Investment loans are considered ‘good’ debt because:

  • the income the investment generates can be used to help repay the loan
  • the interest costs may be partly or fully tax deductible, and
  • it can assist with accelerating wealth creation.

Credit Score and Financial Health

A credit score is a three-digit number that rates your creditworthiness. FICO scores range from 300 to 850. The higher the score, the more likely you are to get approved for loans and for better rates. A credit score is based on your credit history, which includes information like the number accounts, total levels of debt, repayment history, and other factors. Lenders use credit scores to evaluate your credit worthiness, or the likelihood that you will repay loans in a timely manner.

There are three major credit bureaus in the U.S.: Equifax, Experian, and TransUnion. This trio dominates the market for collecting, analyzing, and disbursing information about consumers in the credit markets.

The credit score model was created by the Fair Isaac Corp., now known as FICO, and is used by financial institutions. While other credit scoring systems exist, the FICO Score is by far the most commonly used.

There are a number factors that go into calculating your FICO credit score, including your repayment history, your debt utilization, the length of your credit history, your credit mix, and any new account openings. Lenders use your credit score to determines whether to approve you for products like mortgages, personal loans, and credit cards, and what interest rates you will pay.

A credit score can significantly affect your financial life. It plays a key role in a lender’s decision to offer you credit. Lenders are more likely to approve you for loans when you have a higher credit score, and are more likely to decline your loan applications when you have lower scores. You can also get better interest rates when you have a higher credit score, which can save you money in the long-term.

Conversely, a credit score of 700 or higher is generally viewed positively by lenders, and may result in a lower interest rate. Scores greater than 800 are considered excellent. Every creditor defines its own ranges for credit scores and its own criteria for lending. Here are the general ranges for how credit scores are categorized.

  • Excellent: 800–850
  • Very Good: 740–799
  • Good: 670–739
  • Fair: 580–669
  • Poor: 300–579

When information is updated on a borrower’s credit report, their credit score changes and can rise or fall based on new information. Here are some ways that your can improve your credit score:

  • Pay your bills on time: Six months of on-time payments are required to see a noticeable difference in your score. 
  • Increase your credit line: If you have credit card accounts, call and inquire about a credit increase. If your account is in good standing, you should be granted an increase in your credit limit. However, it is important not to spend this amount so that you maintain a lower credit utilization rate. Meanwhile, try to pay down your debt.
  • Don’t close a credit card account: If you are not using a certain credit card, it is best to stop using it instead of closing the account. Depending on the age and credit limit of a card, it can hurt your credit score if you close the account.
  • Work with one a credit repair companies: If you don’t have the time to improve your credit score, credit repair companies can negotiate with your creditors and the three credit agencies on your behalf, in exchange for a monthly fee.
  • Correct any errors on your credit report: You are entitled to one free credit report per year from each of the main credit bureaus. You can get your report through AnnualCreditReport.com. You can also hire a monitoring service to help keep your information secure.

Loan Repayment Strategies

It saves money and time to know how to pay back your current debt in an efficient manner. Examining your financial status typically provides a number of ways to pay down your debt, lessen the amount of debt you have, improve your credit score, and bolster your stability financially. It is more important than ever to learn the art of smart loan repayment in this age of shifting financial conditions.

Now, let’s explore some astute loan repayment techniques that will enable you to take charge of your financial destiny and confidently accomplish your objectives.

Here are effective repayment strategies that you can use:

  • 1. Utilize Savings for Loan Repayment:

When contemplating loan repayment strategies, your first source of consideration should be your savings account. You can use your savings to pay off the loan, but it’s crucial to have a substantial savings balance to do this effectively. A smart approach is to begin by focusing on paying off the loan with the highest interest rate.

  • 2. Consider Debt Consolidation:

Debt consolidation is one of the effective loan repayment strategies and a strategic method for managing your ongoing debts. If you have multiple loans, the cumulative interest rates can become overwhelming and challenging to handle over time.

To simplify repayment and make it more cost-effective, you can consolidate all your debts into a single loan. Opting for a secured loan provides the advantage of a higher loan amount, a lower interest rate, and a longer tenure. This combination not only ensures you have the necessary funds but also consolidates all your debt into one manageable monthly payment while keeping expenses in check.

  • 3. Shorten the Loan Tenor When Possible:

If you have a loan with a fixed tenor, such as a home loan, one of the key loan repayment strategies to consider is reducing the tenor whenever an opportunity arises. This means that with each annual appraisal, you can trim a few months off the tenor. While this may slightly increase your monthly installment, it significantly reduces the total interest paid on your loan. Over time, you’ll efficiently repay the loan.

  • 4. Make Extra Payments for Early Loan Clearance:

When exploring loan repayment strategies, another effective approach is to make partial prepayments toward your loan, alongside your regular EMIs. These payments directly reduce the loan principal, consequently lowering the interest amount. This not only makes your loan more affordable as time progresses but also enables you to repay the loan in a shorter duration. However, ensure your loan doesn’t carry substantial prepayment charges or penalties to fully capitalize on this option.

  • 5. Emergency Fund for Loan Security:

Incorporating an emergency fund into your financial strategy can provide a safety net during unexpected situations. Having a fund in place ensures that you can continue making loan payments even when faced with unforeseen expenses or job loss, preventing any default or late payment fees. This approach aligns well with effective loan repayment strategies, safeguarding your financial stability while managing your outstanding loans.

  • 6. Consider Refinancing:

Refinancing can be an effective strategy if you have high-interest loans. It involves taking out a new loan with better terms to pay off existing loans. It can lead to lower interest rates, which can result in substantial savings over the life of the loan. However, it’s essential to exercise caution and thoroughly research before opting for refinancing, as it may not be suitable for everyone in their pursuit of effective loan repayment strategies.

  • 7. Utilize Employee Provident Fund (EPF):

For salaried individuals in India seeking smart loan repayment strategies, one of the most effective methods is to leverage your Employee Provident Fund (EPF). You can withdraw a portion of your PF balance for specific purposes, including repaying home loans, educational loans, or even personal loans. Check with your employer and the Employees’ Provident Fund Organization (EPFO) for eligibility and withdrawal procedures.

  • 8. Use the ‘Moratorium’ Option Sparingly:

In cases of financial emergencies, certain loans in India provide a ‘moratorium‘ period, allowing you to temporarily stop or reduce your EMI payments. While this can offer relief during challenging times, it’s important to be cautious, as this can adversely affect your credit score and increase your interest rates. As far as possible, it’s best to avoid the use of this option and consider it only as a last resort.

Tax Planning for Wealth Preservation

Tax preparation is a continuous procedure. Tax planning is something that needs to be maximized throughout your career with a solid tax planning strategy if you want to really create and leverage your assets. How can we go about doing this? We can perform a plethora of actions at various phases of our lives.


For those who are actively working, there are several tax planning ideas to consider.  The first three listed below are essentially an asset shift strategy, whereby you are shifting assets you would otherwise have in a taxable account (bank or brokerage) into a retirement account.

  • Pre-tax Savings:  Saving money in a pre-tax company-sponsored retirement plan is the first and easiest strategy to employ to reduce your tax bill.  If you save $1 in a pre-tax company retirement plan such as a 401k or 403b, you’re saving between 20-45 cents of that dollar the government (federal & state) would have taken (depending on your current tax bracket), if you didn’t participate in the savings plan.  Eventually, you’ll need to begin withdrawing these assets in retirement and will pay tax on 100% of the withdrawals.  If your tax bracket is lower in retirement than it is today, as is frequently the case, you’re saving taxes.  Of course, no one knows what tax rates will be in the future when you’re ready to begin withdrawals, but people often have a lower tax rate in retirement.
  • Traditional IRAs:  If you have assets sitting in a bank or brokerage account, those assets typically generate income and capital gains, all of which you are taxed on.   By contributing to an IRA, you’re able to defer gains into the future and possibly withdraw them when you’re in a lower tax bracket.  This strategy is particularly effective if you have investments that generate income, which is taxed at a higher rate than investments that generate capital gains.
  • Roth IRAs:  Expanding on the concept above for traditional IRA contributions, if you’re eligible for a Roth IRA, you’re able to contribute after-tax income to an account that will never be taxed again. Contributing to Roth IRAs also allows you to control your tax bracket in retirement, which we will explore shortly.

Note:  Assets held in retirement accounts are protected from litigation and bankruptcy.  In addition to the potential tax benefits, these accounts provide a distinct asset protection feature.

  • Home Ownership:  The current tax code (1/2017) allows for the deduction of property taxes and mortgage interest.  Owning a home, relative to renting, provides the advantage of deducting your property taxes.  In addition, home mortgage interest is also a deduction.  For those who own homes that are fully paid for, there is a tax incentive to carry a mortgage.  If your mortgage rate is 4% and you’re in the 30% tax bracket, your true cost of money after deducting the mortgage interest, will be closer to 3%.  If you believe you can invest the money and earn a higher return than 3%, you’re both saving taxes and growing your investments, which is a two-fold wealth-creating strategy.
  • Bunching Tax Deductions:  If your annual tax deductions are close to the standard deduction, it may make sense to bunch 2 years of tax deductions, such as property tax, into one year.  This would allow you to itemize a large deduction in one year and utilize the standard deduction in the following year.
  • HSAs:  Contributions to Health Savings Accounts (HSAs) are tax deductible. Funds in a HSA grow tax-deferred, and qualified withdrawals for healthcare expenses are tax-free.  This is one of the rare triple tax savings vehicles available.  Maximizing contributions to HSAs and paying ongoing health expenses out of pocket during your working years can make sense, building a tax-free healthcare bucket to pay for health expenses in retirement.

Nearing Retirement

  • Maximizing Retirement Plans:  For people over the age of 50, there are ‘catch up’ contributions allowed by employer-sponsored plans, IRAs, and HSAs.  It’s not uncommon to have scenarios where reaching the upper savings limits for these plans has constraints on your current cash flow, especially for dual-income spouses.  Assuming you have sufficient savings in bank or brokerage accounts, it’s to your advantage to maximize your contributions to your retirement accounts to draw down your taxable income and utilize bank or brokerage assets to supplement your cash flow.
  • Planning Charitable Contributions:   This strategy can be used anytime but is frequently used in the last year or two of full employment when your income is especially high.  During high tax years, you can make a larger-than-normal charitable contribution to a Donor Advised Fund (DAF).  In addition to getting a larger charitable deduction, the charitable deduction is worth more in years you have high tax liability so we want to maximize this benefit.  Frequently people will pre-fund 5 or more years of charitable contributions into the DAF to maximize this deduction.  Once the funds are in the DAF you can make donations to your preferred charities over time.
  • Long-Term Care Deduction: If you have purchased long-term care insurance, many states such as Wisconsin allow a portion of your premium payments to be deducted.  Check your state income tax code.
  • Paying Long-Term Care Premiums:  If you have a long-term care insurance policy AND you have non-qualified deferred annuities, you are able to pay the LTC premium from the annuity with pre-tax dollars.  In other words, withdrawals sent directly from an annuity to pay for an LTC premium aren’t taxed.


  • Income Planning:  At retirement your wages drop and you’ll pay taxes on investment, pension, and social security income as well as withdrawals from retirement accounts and annuities.  Planning the timing of your income flows in the context of your overall financial plan, can provide a huge tax savings.  If you are married and your spouse also has assets and income sources, it’s imperative to coordinate all scenarios.
  • Tax Bracket Maximization:  Expanding on the income planning idea above, large tax savings can occur over time when individuals maximize their current tax brackets.  As an example, someone may be in the middle of a given tax bracket but have the potential to accelerate additional income via an IRA withdrawal or Roth Conversion, bringing them towards the top end of their respective bracket.  This is done in instances where a larger future tax liability is predicted.  This happens most often when someone has large Required Minimum Distributions (RMDs) that must be taken from qualified retirement accounts.  A beneficial technique to smooth tax liability over time is to facilitate partial Roth IRA conversions to maximize tax brackets from retirement age until age 70.  If you’re retired, but under age 70, this technique should be explored.

Advanced Techniques

  • Charitable Gifting:   Gifts to qualified charities serve as a tax deduction.  The more money you give to charity, with certain constraints, the less you pay in income taxes.  If you have appreciated assets, such as stocks, mutual funds or even real estate, it makes sense to give shares of these investments directly to the charity.  This strategy provides a charitable tax deduction and helps you minimize future capital gains taxes.  If you’re writing checks directly to charity, you’re missing out on a tax-saving opportunity.
  • Family Planning:  It’s not uncommon for high net-worth families to recognize they will never outlive their money.  At that point, the objective is to maximize the tax code looking at the entire family’s situation.  Family members in the lower income tax brackets pay less, and sometimes no capital gains tax.  Shifting assets to lower-income children can create large tax savings for the family.

If you are not eligible to contribute directly to a Roth IRA where assets are allowed to grow tax-free, it’s possible to gift assets to your children so they can contribute to their Roth IRAs, assuming they qualify.

Strategies for Minimizing Estate Taxes

For many Americans, the thought of the estate tax, also known as the death tax, is unsettling. In actuality, though, the great majority of people will never come upon it. This is due to the exceptionally high $12.92 million exemption level for the federal estate tax. You won’t be responsible for paying any federal estate taxes if the value of your estate is less than the 2023 exemption limit. However, in some areas of the nation, there are state-imposed taxes to deal with. You might think about seeing a financial professional for assistance with your estate strategy.

The majority of people aren’t really excited about the idea of having to pay estate taxes when they pass away, as you might anticipate. Consequently, there are multiple tactics that you might employ to reduce your estate tax liability or completely evade it. If you anticipate that your estate will owe, we go over a number of strategies to avoid paying estate taxes below.

  • 1. Give Gifts to Family

One way to get around the estate tax is to hand off portions of your wealth to your family members through gifts. For 2023, you can give any one person up to $17,000 tax-free (or up to $34,000 if you’re married and you’re filing joint tax returns). Throughout your lifetime, you can give out up to $12.92 million (for 2023) of your wealth as gifts before getting hit with the gift tax.

There’s no limit to the number of people you can give gifts to within a single year. So if you have an $18 million estate, you can gradually pass on your assets to your loved ones until the net value of your estate is less than (or equal to) $12.92 million. Just keep in mind that this threshold applies to both the gift tax and estate tax at the same time.

  • 2. Set Up an Irrevocable Life Insurance Trust.

If you don’t want to leave your family members in a difficult financial situation after you die, it’s a good idea to buy life insurance. Life insurance proceeds generally aren’t taxable. But after you pass away, they could become part of your estate, which is subject to taxation.

To avoid having your life insurance proceeds taxed, you can create an irrevocable life insurance trust. You’d essentially be setting up a trust and transferring the ownership of it to another person. The trust is irrevocable because, in the future, you wouldn’t be able to make adjustments to it without the consent of the trust’s beneficiary.

By transferring over your life insurance policy, your death benefits wouldn’t be part of your estate. It’s best to do this sooner rather than later, however. If you die within three years of making the transfer, your life insurance proceeds would still be considered part of your taxable estate.

  • 3. Make Charitable Donations

Another way to bypass the estate tax is to transfer part of your wealth to a charity through a trust. There are two types of charitable trusts: charitable lead trusts (CLTs) and charitable remainder trusts (CRTs).

If you have a CLT, some of the assets in your trust will go to a tax-exempt charity. By donating to charity, you’ll lower the value of your estate and end up with an extra tax break. Once you die (or after a pre-determined period of time), whatever’s left in the trust will be passed on to your beneficiaries.

On the other hand, if you have a CRT, you can transfer stock or another appreciating asset to an irrevocable trust. Throughout your lifetime, you can make money off of that asset. And then when you die, your investment income will go to charity. In the process, you’ll avoid the capital gains tax and lower your estate tax burden. Plus, you’ll score a tax deduction.

  • 4. Establish a Family Limited Partnership

If there are any family-owned businesses or assets (such as properties) that you want your children to own after you’re gone, you can set up a family-limited partnership. Typically, this involves establishing a general partnership and then making heirs and family members limited partners.

As the general partner, you’ll still be able to call the shots. But your partners (whether they’re your children or another relative) will have a stake in your company or own a portion of your assets. As a result, the size of your estate will be smaller.

  • 5. Fund a Qualified Personal Residence Trust

An additional way to reduce the number of assets that will be subject to the estate tax is to fund a qualified personal residence trust (QPRT). With a QPRT, you’re transferring the ownership of your home into a trust. During the trust’s term, you can continue living in your home without paying rent. After that term ends, your beneficiaries can take over your property.

Through a QPRT, you can freeze your primary residence and/or vacation home’s market value and avoid paying the gift tax (as long as you haven’t exceeded the lifetime limit for taxable gifts). You’ll also immediately reduce the size of your estate.

Unfortunately, if you die before the end of your trust’s term, your home will still be part of your estate. And while you can create a trust for your house with a mortgage, it’s easier to set up a QPRT for a rental property.


It’s critical to arm yourself with the information and resources necessary to successfully navigate your financial path and its future in the complicated financial environment of today. The foundation for accumulating long-term wealth and attaining financial success is laid by the following ideas.

Each principle provides insightful analysis and practical tips to support readers in their quest of financial well-being, from constant learning to financial education.

  • Financial Education

Take control of your financial destiny by prioritizing financial education. Expand your knowledge of money management, investing, and building wealth. Learn from reputable sources, attend seminars, and seek reliable information. The more you know the better equipped you’ll be to make informed financial decisions.

  • Book: “I Will Teach You to Be Rich” by Ramit Sethi
  • Podcast: The Money Guy Show” hosted by Brian Preston and Bo Hanson
  • Mindset and Attitude

Cultivate a positive mindset and adopt an attitude of abundance and possibility. Believe in your ability to achieve financial success and approach challenges with determination and resilience. Your mindset plays a crucial role in shaping your financial outcomes.

  • Long-Term Thinking

Shift your focus from short-term gains to long-term financial planning. Set clear financial goals and develop a strategic approach that spans years or even decades. Understand that wealth accumulation and financial security are the results of consistent long-term planning and disciplined actions.

  • Wealth Creation and Accumulation

Discover strategies for building wealth and accumulating assets over time. Explore methods such as passive income streams, diversified investments, and prudent financial decisions. Focus on growing your net worth and building a foundation for financial stability and independence.

  • Value Investing

Uncover the power of value investing. Learn to identify undervalued assets or stocks based on fundamental analysis. Take a long-term perspective and invest in assets that have the potential for appreciation. This approach emphasizes making informed investment decisions based on a thorough understanding of the underlying value of the asset.

  • Discipline and Self-Control

Develop discipline and self-control in managing your personal finances. Cultivate responsible spending habits, create and adhere to a budget, and resist impulsive purchases. Nurture the ability to delay gratification and make choices that align with your long-term financial goals.

  • Living Below Means and Frugality

Embrace the principle of living below your means and practicing frugality. Prioritize saving and investing over-indulgent spending. Accumulating wealth often comes from a lifestyle of modest living and making smart financial choices.

  • Continuous Learning and Adaptability

Commit to continuous learning and stay informed about the ever-evolving financial landscape. Keep pace with industry trends, new investment opportunities, and changes in regulations. Be open to adapting your financial strategies as needed to maximize your financial potential.

  • Book: “Atomic Habits” by James Clear
  • Podcast: “Financial Independence Podcast” hosted by Jonathan Mendonsa

By mastering these eight principles you’ll gain the knowledge and mindset needed to build wealth and achieve long-term financial success.

The goal: Apply these principles consistently and adapt them to your unique circumstances. You’ll then empower yourself with deeper financial education, be able to embrace a long-term perspective and cultivate disciplined habits.

About Author


MegaIncomeStream is a global resource for Business Owners, Marketers, Bloggers, Investors, Personal Finance Experts, Entrepreneurs, Financial and Tax Pundits, available online. egaIncomeStream has attracted millions of visits since 2012 when it started publishing its resources online through their seasoned editorial team. The Megaincomestream is arguably a potential Pulitzer Prize-winning source of breaking news, videos, features, and information, as well as a highly engaged global community for updates and niche conversation. The platform has diverse visitors, ranging from, bloggers, webmasters, students and internet marketers to web designers, entrepreneur and search engine experts.