10 Financial Tips for a Richer Life

People often say they want to grow their financial wealth. Personal goals might range from preparing for a comfortable retirement – or being the next Warren Buffet. Everyone has a unique vision and path to realize a richer life, and there is no single solution. Here are 10 financial tips that savvy investors can take to create their own custom wealth management strategy to achieve personal wealth goals.

Set Goals & Objectives: The first step to wealth management is creating specific goals and objectives. Those goals might be saving to buy property, pay for college or generate income for retirement. Having goals is important for a variety of reasons. It helps to create a realistic plan for achieving those goals. It also helps individuals track their progress, as well as prioritize investment and spending decisions.

Assess Your Risk Tolerance: With the exception of fixed income assets, such as U.S. government-backed bonds or CDs, most other investments carry an inherent level of risk. Individuals need to understand their personal tolerance for risks they are willing to take as it will shape their overall investment strategy. Are you an aggressive, moderate or conservative investor? Or perhaps your risk profile is a combination of all three categories? Once you understand your tolerance for risk, it can help you to create a portfolio strategy that fits your risk profile.

Understand the Options: Investing can be a complex environment with thousands of different choices that include stocks, bonds, mutual funds, and exchange-traded funds. Additionally, investors have access to a variety of “alternative assets” that include real estate, art, commodities, private equity investments, and hedge funds.

Diversify Investment Portfolios: Savvy investors recognize the advantages of diversification as a means to minimize risk and also achieve a higher overall blended return for a portfolio. Diversification can provide added benefits, such as hedging against inflation or minimizing exposure to cyclical downturns in certain sectors, such as energy or technology.

Invest in Real Estate: Modern Portfolio Theory (MPT) recommends investing across multiple asset classes as a means to maximize risk-adjusted returns. Specifically, MPT recommends allocating 10 to 20% of a portfolio to real estate assets. Historical results show that strategy to be effective in posting above-market returns. Real estate also can be used to stabilize portfolios as it is not subject to the same fluctuations in value as stocks.

Work with a Professional Wealth Management Firm: Investing can be a vast and complicated arena for individuals to navigate on their own. Professional advisors such as CanAm Capital Management create value for clients by leveraging expertise and resources to clients in terms of underwriting, analytics, portfolio building, and diversification that matches an individual’s investment goals and tolerance for risk.

Review & Update Financial Goals: Financial goals can and do change over time. Initially, a goal might be to create wealth to buy property or send children or grandchildren to college. Once goals are achieved, new goals must be set. Individuals should periodically assess their investment objectives, as well as take the necessary steps to adjust the strategy needed to achieve them.

Balance Income & Spending: The key to building wealth is managing the inflows of income and appreciation along with the outflows of spending. Spending levels should align with overall wealth-building goals. Wealth building goals also can help individuals prioritize spending decisions.

Preserve Your Wealth: We are all human. As such, it is necessary to plan for unexpected life events such as illness, long-term care or the inevitable transfer of wealth to family members or others at the end of life. Work with trusted advisors to create legal documents, such as wills, living wills, and estate plans, to preserve wealth and personal property.

Enjoy Your Wealth: It seems like an obvious step, but oftentimes people get so caught up in the path they are on to build wealth, that they forget to enjoy the wealth they have accumulated. Wealth building is a journey that takes time and it’s important to remember to enjoy the journey.

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