How To Build Wealth in Your 40s – GOBankingRates
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Is it possible to build wealth in your prime years? The answer is yes. GOBankingRates spoke to several financial professionals about what individuals in their 40s need to know about building wealth and each asset that can help improve your wealth building.
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Establish a Strong Foundation
The first step to building wealth in your 40s is to establish a strong foundation.
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Marcus P. Miller, CFP and financial advisor at Mainstay Capital, said this foundation needs good money habits, like putting a decent percentage of your income into investment accounts. Those in their 40s also need a budget and should hire a financial advisor who will help keep their hand off the throttle.
Jason Blumstein, CEO and founder of Julius Wealth Advisors, recommends taking the time to take an inventory of your financial big picture.
“Understand your assets, liabilities, net worth, income, expenses and cash flow,” Blumstein said. “If you know where you are at, you know where you need to go.”
Once you have an understanding of this inventory, Blumstein said you will properly know if you need to add to certain areas. One of the most common cash flow mistakes Blumstein sees people making is not paying themselves first. Blumstein recommends making paying your future self an expense to automate your habits.
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Diversify Tax-Efficient Investment Accounts
Cecil Staton — CFP, CSLP, president and wealth advisor at Arch Financial Planning — said he can predict an individual or family’s ability to build wealth by determining what the savings rate of their gross income is.
Staton recommends individuals and families save at least 20% of their gross income for their long-term goals. After that, individuals and families should have a diversified investment plan. This includes having a blend of tax-efficient accounts like a Roth IRA, tax-deferred 401(k) and taxable brokerage account. Having the blend of accounts will give individuals and families greater flexibility in their retirement years to pull from each respective account when it makes sense to do so.
Build Up a Financial Cushion
Kyle Hurley, CPA and private wealth advisor at Munroe Morrow Wealth Management, said building wealth requires emergency savings and …….
Source: https://www.gobankingrates.com/money/wealth/how-to-build-wealth-in-your-40s/