Building wealth is something that almost everyone struggles with. There are many different tips that people can take to help build wealth in 2016. One of the biggest ways that people can increase their level of wealth is by increasing the amount of money that they invest. One of the best ways to do this is by freeing up cash flow through the paying down of debt. Here are several different tips on building wealth and updates that you need to know in 2016.
A person’s income is their biggest wealth building tool over the long term. Anyone who wants to build a large amount of wealth needs to make sure that they are maximizing how much money they can earn. In 2016, there are more opportunities than ever before to earn extra income through side gigs. There are many different websites that are committed to helping people in this area. If you are trying to build wealth, one of the best ways that you can do so is by increasing your income in 2016.
Paying Off Debt
Another important aspect of paying of building wealth is paying off debt. Many people in the United States have record levels of student loan and credit card debt. Credit cards carry a high rate of interest that can be difficult to pay off. Anyone who is trying to invest a lot of money every month needs to make sure they have a low debt load. This will free up monthly cash flow to invest in other areas. If a person can pay off all of their debt outside of their home mortgage, they will be well ahead of the curve in building wealth during 2016.
Rate of Return
Another area to look at when trying to build wealth is increasing the rate of return. The higher rate of return, the more wealth that can be built over time. There are several ways this can be increased. It is vital that your investments are diversified in some way. There are many studies that show diversification leads to less risk and a higher return over time. The good news is that there are plenty of index and mutual funds that do the diversification for you. Over the long term, this is perhaps the easiest way to increase the rate of return that is in your portfolio.
David Milberg is a full time investment banker and an entrepreneur from NYC.