How to Grow Your Wealth in 3 Stages, and Maximize Your Money During Each Step
Written by
Adam Palasciano
Edited by
Travis Woods
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For many, the idea of becoming wealthy seems far fetched. It’s often thought that becoming wealthy is “impossible.” According to the Charles Schwab Modern Wealth Survey 2023, Americans say you need $2.2M to “be wealthy” as of 2023.
While this seems like a difficult status to achieve, it doesn’t have to be.
According to New Trader U, there are three stages of wealth that form the basis for becoming wealthy. Whether you’re a financial expert or if you’re just starting out, following these three steps can help lead to long term wealth.
1. Accumulation
This is the phase where you work towards accumulating wealth through saving and investing. Diligently putting aside a set amount of money each month will help you build your financial reserves. Once you have enough money accumulated, it becomes easier to grow your money. Utilizing a high yield savings account as well as purchasing long-term, conservative investments is key to building wealth. Conservative investments tend to have a track record of slow but steady long term growth.
2. Growth
Once you’ve accumulated enough wealth, you can take it and reinvest in assets that offer high returns. This phase includes transitioning to a more aggressive investment strategy which can grow your wealth even further. Maintaining only conservative investments for your entire wealth building journey could limit long term growth. To add, tax planning also comes into play at this stage. It’s a good idea to consult a tax professional who can help you navigate the complex tax system.
3. Preservation
Once you’ve gained significant wealth, the goal is to preserve it. Preservation of wealth involves diversifying from aggressive assets to a blend of aggressive and lower-risk assets. The idea behind diversifying your assets is that you have different types of investments that grow, ebb and flow with the market, and protect you from loss in the long term. Preservation of wealth is crucial to ensure that you stay wealthy.
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