Accumulating wealth doesn't always have to be a mystery. Many times, following proven strategies or having the commitment and discipline to follow investment trends can produce results over time. The following are five trends to a wealthier future:
1 Buy a home
Buying a home is the foundation of wealth building. In 2002, the U.S. Census Bureau reported that almost 42% of a person's net worth comes from the equity in his or her home. That's why our No.1 Declaration of Financial Empowerment principle: to use homeownership to build wealth is the most important With housing prices soaring, it's even more important to purchase a home now. The key is to purchase a home you can afford. If your mortgage payment works out to the same as the rent you are paying, then you should have no trouble making your monthly payments.
Homeowners benefit from their purchase because they are paying themselves first. Each mortgage payment lowers the principal, increasing the home's equity. Homeowners also benefit from tax breaks on mortgage interest and repairs made to the home.
2 Start a home-based business or consultancy
Since job security is Rot guaranteed in the current economy, it makes sense to establish a business. Another key to building wealth is establishing additional streams of income, and working as a consultant or freelancer can do just that. It doesn't have to be a full-time commitment. Maybe you have an expertise and can earn additional money over time. Just a few thousand dollars in extra income invested over the long haul can turn into hundreds of thousands of dollars.
Once you've established your small business, you could be eligible for tax breaks such as the home office deduction or deductions for purchasing business equipment. With proper consultation from an accountant, it may make sense for you to establish a SEP-IRA account, which will allow you to save additional income tax-deferred at higher levels than an ordinary IRA (up to 25% of an employee's compensation, providing the contribution does not exceed $40,000).
3 Contribute to an IRA
With an ailing Social Security program and fears that corporations such as United Airlines have underfunded pensions, opening an IRA account is a necessity for most investors. It is particularly important to open one if you have a job that does not provide a pension upon retirement.
"An IRA gives you the ability to grow your investments tax-deferred, and this saves you money because taxes are the biggest...