Looking To The Future Of Wealth Preservation

There have been so many signs that life is returning to something that at least on the face of it, looks and feels like “normal,” that it can be easy to forget that many Americans have seen hundreds of thousands of dollars wiped off of their net worth. The past two years have wreaked havoc on retirement and investment funds with many fund managers having lost millions of dollars, causing huge problems for older Americans in retirement currently, or heading into retirement. With the latter having to reconsider their retirement date altogether.

What we have all realized, is that simply relying on traditional forms of investment and wealth planning is simply not good enough anymore. And, now we need to think of new ways to create wealth - certainly, but preserving it remains the challenge of the age.

From the economic crash of the credit crunch in 2008, a couple of things have happened in America, financially speaking that is. Some Americans have become accumulated ungodly amounts of wealth - look at this article on Forbes, the richest billionaires in America now have a combined wealth of over $4 TRILLION, meanwhile, 20 million people lost their jobs in the pandemic. 

We have a class structure that is unique in America, and in some ways, being middle class could work to your disadvantage. Something worth thinking about.

How does the average American create wealth today?

Well, that depends on who you ask and what your definition of wealth is. In America, it is widely thought that you need a personal net worth of around $2 million to be considered “wealthy” - that is after you’ve paid off your properties. So to put that another way, you should be aiming to have an annual income of between $250,000 - $ 500,000 annually to accumulate that level of net worth over a reasonable amount of time. This is not an easy feat, to put it lightly.

So, how do we do that? Let’s have a look at a few of the things that Americans are doing to try and create as much of a net worth as possible, whether these financial storms better, and of course, enjoying a higher standard of living.

Start with your banker (yes, really). Speak to your bank about prioritizing savings goals and then figuring out what your cash flow looks like and how much you can realistically save regularly and consistently to start creating a savings pool of capital that can then be reinvested into stocks, funds, or second or third properties.

Now, if you’re going to take those savings goals seriously and pump as much money as you can into that project, you’re going to want to have as much additional money as possible, right? That means - paying off your debt and not making any new debt.

Then, you need to diversify your income streams and that means not relying on just one source of income. The magic words here are passive income. A passive income happens without you necessarily having to devote the majority of your time and effort towards generating that income. Take rental income from property investments for example. Many Americans are also taking on second jobs in line with their hobbies and passions to generate additional income streams and while this will go some way to establishing a more lucrative savings pool, for many of us it is not entirely sustainable.

Property remains one of the most solid ways to create and preserve wealth, but the mistake that many people make is taking on a second or even third property before they’re financially stable enough to do so. That can have a massive impact on your finances and cause irreparable damage if not handled correctly.

Virtual currencies, online share trading, and technology have made it possible for the average Joe to make a lot of money without having a highly specialized education or sophisticated background, but you’ll still need to know what you’re doing, so do your homework.

Our financial futures are important and they’ll influence major life decisions like which retirement community we’ll be able to afford or the education we’ll be able to offer our children.