Start Investing Your Income Now
Not every investment pays dividends, but when done correctly investing your income can significantly improve your net worth. Most everyone has a savings account, a checking account, and a credit card account. It is surprising how little people have invested in their savings accounts.
A checking account is used for managing monthly expenses, but all additional income should be deposited into an interest-bearing savings account. This is what is meant by investing your income. True to form, today’s low-interest accounts do not yield much interest, but they are still a better option than cash under the mattress.
You may wish to have a debit order going through to an ETF, fund manager, 401(k) or similar monthly investment. Provided you invest wisely, you will see your net worth appreciating over time.
Buy a Quality Vehicle and Take Care of It
This may sound like contrarian investment advice, but it is sage advice. Everybody knows that a vehicle is a depreciating asset. The minute you drive it off the lot, it is worth less than you paid for it. However, the value of the vehicle is not so much the cost of that vehicle but the utility value that is derived from it. A safe, reliable car will save you a bundle over the long-term.
Vehicles are major expenses, what with insurance premiums, gasoline, repairs, maintenance, licensing and registration, to name but a few. If you invest in a high-quality vehicle, it will serve you well over many years. The initial impact of buying a new vehicle is a depreciation of your net worth, but over time you will recoup those losses.
What Fixed Expenses Are Eroding Your Net Worth Every Year?
Look at your monthly bank statements and highlight the fixed expenses you are incurring. Things like rent, dental premiums, healthcare premiums, Internet, cell phone bills, lawn service, HOA fees, pet insurance, and a myriad of other expenses are likely to be found on your statements. Not every one of them is necessary. You can eliminate some of them altogether, or shop around for better deals. The biggest expense drivers are rental, car payments, medical and food. Fortunately, these can be lowered without negatively affecting your way of life.
Explore Alternative Investment Possibilities
Wall Street is not for everyone. It is a cutthroat shark tank where only the strong survive. If you have money set aside for investment purposes every month, you may wish to consider alternative investment options. Institutional brokerages offer little in the way of personal control over your finances. Fund managers take your money, levy high fees and commissions on your accounts and infrequently report to you. Various options trading strategies abound, and the consensus is as follows: there is no substitute for a comprehensive understanding of the financial markets.
Markets typically trade in cycles, and an understanding of those cycles can help you to increase your net worth considerably. Various trading methodologies like the Moving Average Convergence Divergence (MACD) allow you to understand price momentum better, as well as the direction of asset trends. It is far more lucrative to take a hands-on approach to your investment regimen than leaving it blindly in the hands of institutional investors.
Debt Reduction Is Crucial to Increasing Your Net Worth
The very concept of Net Worth is a reference to your available assets after all your expenses have been considered. Debt is a net worth killer. Reduce your debt to manageable levels, or eliminate it entirely to start seeing increases in your net worth.
The first way to start eliminating debt is to spend less. Next, pay off credit cards with higher rates of interest and then move on to the credit cards with the lower rates of interest. It is wise practice to consolidate debt repayments into manageable monthly payments. This is a surefire way to reduce your debt and start increasing your net worth.
If it is proving difficult to reduce debt, you always have the option of speaking to a professional financial advisor. Oftentimes, the high fees associated with financial advisers will deter individuals from seeking their assistance. Fortunately, commonsense advice can save you a bundle in the long term.
A tax professional is a case in point. In the US for example sole proprietors can save huge amounts of federal and state income tax payments by switching over to an S-Corporation. This is yet another example of a debt reduction technique.