How to Start Building Wealth as a Young Adult
You are never too young to begin saving and investing. If you start investing when you are young you are more likely to develop strong wealth-building habits that will last the rest of your life.
There is no single best way to build wealth. The choice of wealth-building strategies will depend on your risk tolerance, investment knowledge, and your time horizon.
However, there are some basic strategies for building wealth that are common to most young adults.
Basics Strategies for Building Wealth as a Young Adult
Start Early
Time is the most important factor in building wealth. The longer you can save and invest, the more likely you are to reach your financial goals. When you start investing early you can contribute more to your investment strategies. In some years you may incur investment losses but starting to invest at an early age will give you more time to recoup any losses.
Establish a Budget
Determine your necessary expenses and commit the rest of your income to your savings for investment. Avoid lifestyle creep by maintaining your budget as your income increases as you age. Don’t be tempted to “keep up with the Jones’s”.
Automate your Savings
Have your regular savings commitment automatically transferred from your checking account to your savings account (i.e., monthly). This will prevent you from spending money intended for savings and investment.
Take Advantage of Compounding
When you use compounding, i.e. you reinvest your investment income, you are earning “income on income.” Therefore, you are earning investment income on both your original investment and on prior investment income earned.
Avoid High-Interest Consumer Debt
Never carry a credit card balance. There is such a thing as “good” debt (such as a house mortgage) but “bad” debt such as credit card debt, personal loans and car loans should be avoided, due to their high rates of interest and/or the depreciating nature of the purchased assets.
Acquire the Knowledge to Understand your Investments
As time allows, try to learn as much as you can about the investment opportunities available to you before committing your savings.
Obtain the help of a Financial Professional
A financial professional can help build an investment strategy specific to your goals. As well, a financial professional can establish a fully comprehensive financial plan which includes the right investment strategies to reach your overall long-term wealth-building goals.
Over time, a steady investment strategy with a diversified portfolio has proven to be a consistent way of building wealth. The longer your time horizon, the more likely you are to meet your investment goals. Starting as early as possible is key to having a long investment horizon and also allows you to have a greater risk tolerance, potentially enhancing your long-term wealth-building success.
Build Your Wealth with Bloom Investment Counsel
Are you looking for a personal investment management service that can help you build your wealth? For over 25 years, our team at Bloom has provided actively managed, customized Canadian and U.S. dividend-paying portfolios for wealthy individuals, family offices, foundations, corporations, institutions, and trusts.
We invest in income-generating investments, specifically dividend-paying stocks, which can help our clients generate income, if needed, and growth — opening the door for a financially stable and secure retirement.
For more information, contact us today. Call us at +1–416–861–9941 or email us at info@bloominvestmentcounsel.com
This content is provided for general informational purposes only and does not constitute financial, investment, tax, legal or accounting advice nor does it constitute an offer or solicitation to buy or sell any securities referred to. Individual circumstances and current events are critical to sound investment planning; anyone wishing to act on this content should consult with his or her financial partner or advisor.