Wealth is defined as an abundance of valuable possessions or money. How much wealth you have is determined by subtracting liabilities from assets. This is also how you calculate your net worth. Have you thought about what that number is lately? It’s probably different than it was before COVID-19 came on the scene.
The time we’ve spent in isolation during 2020 has caused most to do a lot of self-reflection. Too much for many of us to be comfortable with. Still, it’s always a good idea to periodically assess where you’re at and where you’re going. Why not spend some of this navel-gazing time doing and in-depth evaluation of your finances?
You might be pleasantly surprised at what you discover.
Get creative to build wealth
I often find, when working with families and business owners to assess their net worth, that real estate is a significant portion of their wealth. Most, though, aren’t leveraging this asset properly. That’s because people don’t think of real estate as an asset. Instead, they want to talk to about stock market investments and IRAs. That’s a bad idea. Real estate can significantly contribute to your bottom line. But if you’re not thinking of it as an asset, it can cost you dearly come tax time.
If you’re looking for a creative way to preserve and build prosperity as part of your retirement strategy, consider real estate. A portfolio of rental properties is a great way to diversify your wealth while providing potential retirement income. Plus, the tax advantages with this type of holding can be considerable. If you’re a high net worth individual seeking a great tax shelter for assets, this might be a smart investment to consider as part of the mix.
Here’s something else to think about if you see retirement in your present or future. Health care insurance conflicts are creating unprecedented medical costs for retirees. Covering the rising costs of wellness is going to require more money and/or imaginative financial strategies.
Finding creative ways to manage your wealth is the new normal. Financial planning is no longer about old school rules. It’s getting more important to engage a financial professional able to view investment and tax strategies simultaneously with an eye toward uncovering inventive ways to preserve your wealth. Stay tuned next month for tips on how to reduce your health insurance costs next year.