I’m a Financial Planning Expert: Here Are the 7 Best Ways To Build Wealth

Building wealth can feel like a mystery.

It seems like everyone online knows how to do it, but there is so much conflicting advice out there. From “get-rich-quick” schemes to crypto traders to meme stocks, it’s hard to know how it actually works in reality.

We decided to tap the experts who know all about building wealth to share the best ways to build wealth the right way, without any tricks or schemes. This is the real way to build wealth from a financial planning expert, not some flashy sales pitch from someone trying to make money off you.

Jamie M. Lima, CFP® and founder of Woodson Wealth Management, reveals his top seven ways to build wealth.

Saving and Investing

Saving money may seem obvious, but putting money in a bank account won’t make you wealthy. You need to invest to allow compound interest to work its magic and help your money grow. Here’s how Lima describes it:

“Saving and investing is perhaps the most obvious way to build wealth, but it’s also one of the most effective. By putting your money into a savings account or investing it in stocks, bonds, or real estate, you can grow your wealth over time. The key is to start early and be consistent. Even if you can only save a small amount each month, it will add up over time.”

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And time is really the key. The longer you invest, the longer you have for your money to grow. Compound interest works best over 20+ year periods with regular contributions during the entire period of time.

Living Below Your Means

Again, this might seem like simple advice, but in practice, living below your means is the only way to come up with extra funds to invest. You don’t build wealth by outspending your earnings, no matter how much you make.

Lima is a fan of focusing on the necessities. “Living below your means is another important way to build wealth. This means spending less than you earn and avoiding debt. By living frugally and avoiding unnecessary expenses, you can free up money to save and invest. It may not be easy, but it’s a crucial step in building long-term wealth.”

Starting a Business

If you want to build wealth faster, one of the best ways to do this is to start a business. While there is a limit to how much you can cut from your spending, there is no limit to how much you can earn if you start your own venture. 

But it’s risky, too, Lima acknowledges, “starting a business can be a risky endeavor, but it can also be a great way to build wealth. By starting your own business, you can create a source of income that has the potential to grow over time. It also allows you to take control of your financial future and build something that you’re passionate about.”

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Investing in Real Estate

Real estate has long been one of the best ways to build wealth. In today’s economy, you can put very little money down, improve the property frugally, and rent it out for both income and price appreciation. It can be risky and many have lost money investing in real estate, but if you have a plan in place, you can use mortgage debt to your advantage.

“Investing in real estate can be a great way to build wealth” Lima said, “especially if you’re able to buy properties that appreciate in value over time. By renting out your properties or flipping them for a profit, you can generate income that can be reinvested to build even more wealth.”

Building a Diverse Investment Portfolio

Investing in meme stocks might be fun, but building real wealth requires protecting your investments by diversifying. You can still get solid returns, but avoid the downside risk of putting all your money in a single investment.

Lima said that “building a diverse investment portfolio is important because it helps to reduce risk and maximize returns. By investing in a variety of stocks, bonds and other assets, you can spread your risk and increase your chances of making money over the long term. This is especially important as you get closer to retirement, when you may want to shift your investments to more conservative options.”

Pursuing Education and Personal Development

Learning new skills and working on yourself is always a good return on investment. It can help you grow your income and live a more fulfilling life. 

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Lima shares that “investing in education and personal development can also be a great way to build wealth. By improving your skills and knowledge, you can increase your earning potential and open up new opportunities for advancement. This can lead to higher salaries, bonuses, and other financial rewards that can help you build wealth over time.”

Seeking Professional Financial Advice

No matter where you’re at in your wealth-building journey, finding a trustworthy professional to help you can speed up your process toward financial independence and building generational wealth. 

Lima agreed, saying that “seeking professional financial advice can be an important step in building wealth. A financial advisor can help you develop a personalized plan for achieving your financial goals, and can provide guidance and support along the way. This can be especially important if you’re just starting out or if you’re facing complex financial challenges.”

Bottom Line

Building wealth takes time, patience, consistency and, most of all, a willingness to invest in yourself and the market. It’s a multifaceted venture that’s worth pursuing. 

Lima puts it this way: “All in all, building wealth takes time and effort, but it’s achievable if you’re willing to put in the work. By saving and investing, living below your means, starting a business, investing in real estate, building a diverse investment portfolio, pursuing education and personal development, and seeking professional financial advice, you can build a strong financial foundation and achieve your long-term goals.”

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