Wealth Building After The Basics

by James & Miel on March 31, 2009 · 0 comments

Every ones personal financial situation is different. Some people are in a position where they are still getting on top of their money, others are in better shape. So, for many people the question is after you’ve got the basics nailed down – where do you go after that?

For example, after you’ve paid off your high interest debts and have an emergency fund built up and are sticking to a budget, whats the next step?

Well, there are several priorities you might consider:

1) Home ownership: If you don’t own your home, and are in otherwise in good shape, you should strongly consider buying a home. There are number of benefits to owning your own place. First, you have a tremendous tax advantages as the mortgage interest and property tax payments can be written off your taxes. You also have greater autonomy in terms of decorating and remodeling. Owning real estate also provides important protection against inflation and housing can be an important asset when you reach retirement after the mortgage is paid off.

2) Start an investment fund: Various gurus like Loral Langemeier and Robert Kiyosaki argue that you should set up a separate bank account to save up for something entrepreneurial. Consider saving five or ten thousand dollars and investing that money into a solid asset class. You might consider something like buying index funds in the stock and bond markets or purchasing an annuity. If you are looking for a bit of a higher return, you could get into something like lending money directly via an outfit like LendingClub or buying shares of stocks directly in a DRIP or brokerage account.

3) Start a small businesses: There are a number of tried and proven business models that you could consider getting involved with. Among these are franchises or rental real estate, etc. Starting a side business can take a great deal of time, but the rewards can be substantial. Just to illustrate this with a personal example, our cousin in law has a number of rental houses which give him several thousand dollars per month in income. The point here is that a proven small business can really improve your bottom line and give you a great chance to build wealth.

Good luck, if you’ve gotten to the point where the basics are nailed down, you are way ahead of a lot of people and have positioned yourself to build your wealth.

Best,

James

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