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
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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.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: How to Grow Your Wealth in 3 Stages, and Maximize Your Money During Each Step
- Say No to Debt. …
- Be Consistent in your Investment. …
- Don’t Put All Your Eggs in One Basket. …
- Switch Investments as Your Priority Changes. …
- Start Early. …
- Invest Smartly. …
- Put Your Fear Aside. …
- Get Expert Advice How to Grow Your Money.
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What are the 7 stages of wealth?Here are the seven levels:
- Dependence. You are still dependent on someone else to provide for you. …
- Survival. You earn just enough income to cover your expenses. …
- Stability. You consistently earn enough money to cover your expenses and have enough left over to start saving. …
- Security. …
- Independence. …
- Freedom. …
- Abundance.How can I maximize my personal wealth/
- Boost your retirement contributions. …
- Trim your expenses. …
- Pay off high-interest debt. …
- Save for emergencies. …
- Renegotiate/consolidate loans. …
- Keep your cars for as long as possible. …
- Increase your salary.What are the 4 pillars of wealth?The journey to prosperity encompasses four essential pillars: Acquire, Protect, Growth, and Pass it Along. Acquiring wealth is the first crucial step. It involves setting financial goals, diligently saving, and making informed investment decisions.What are 3 steps to financial success?Your banker is also here to help and can provide guidance and suggestions on financial accounts and tools that may work for you. Get started on path to financial success with these three steps: determining budgets, tracking spending, and creating realistic savings goals.What are the 7 types of investment?Different Types of Investments
- Mutual fund Investment. As an investor, you have a variety of options to choose from when it comes to parking your funds to generate returns. …
- Stocks. …
- Bonds. …
- Exchange Traded Funds (ETFs) …
- Fixed deposits. …
- Retirement planning. …
- Cash and cash equivalents. …
- Real estate Investment.