Wealth-building is a process that generally takes time. Although becoming an overnight millionaire is appealing to many, the only real way to get rich overnight is via speculation, an inheritance or a lottery win.
Ironically, the best way to build wealth “fast” is to chart out a prudent path toward long-term gains. The quicker you can save and invest, the faster your money will compound, which is the true magic behind building wealth.
You can’t begin any type of wealth-generation plan without having money to invest. As soon as you start drawing an income, make it your top priority to save as much money as you can. One strategy often recommended by advisors is to “pay yourself first,” meaning put money in savings immediately when you receive your paycheck, even before you pay your bills. This type of “forced savings” will require you to trim your discretionary spending but will also result in rapidly growing wealth.
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Beyond simply saving more money, you should also pay attention to how you’re saving and put your money into a high-earning account to get the most out of it. The CIT Bank Money Market Account is an excellent option to help you reach savings goals faster because of a 0.55% APY that’s well above the national average. There are no monthly service fees and you need a minimum balance of just $0.01 to earn the APY. You’ll need a $100 minimum opening deposit and there’s a limit of six transactions per statement cycle.
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Buy an S&P 500 Index Fund
The S&P 500 index doesn’t guarantee profits, but it’s proven itself time and time again to be a tremendous generator of long-term wealth. In fact, most investors are surprised to learn that the “risky” stock market has never lost money over any 20-year rolling period. And yet, the long-term average return of the S&P 500 is north of 10%. This means the S&P 500 index has a tremendous risk/reward profile over the long run. Even legendary investor Warren Buffett, the “Oracle of Omaha” himself, has directed his trustee to keep 90% of his money in an S&P 500 index fund after he passes.
Buy Dividend-Paying Stocks
Dividend-paying stocks may seem like a slow and boring way to build wealth, but they are one of the best ways to tap into a solid and growing source of income, and capital gains as well. The so-called “Dividend Aristocrats” are large, well-known companies in the S&P 500 index, like Coca-Cola and McDonald’s, that have raised their dividends for at least 25 years in a row. This means that those who bought these companies 25 years ago are earning huge effective yields on their original investment amount. Combined with the potential for capital gains, the Dividend Aristocrats can be a great way to build wealth.
Buy a Rental Property
One of the key ways to build wealth fast — and over the long term — is to earn passive income. And one of the best ways to generate passive income is to own one (or several) rental properties. With a well-managed rental property, you’ll receive a steady stream of income every month, with little additional effort required on your part. While you’ll have to find tenants to move in and will have to deal with occasional maintenance issues, your income will essentially be on autopilot. Unlike your mortgage payment, your rents will continue to rise over time, meaning your tenants will be paying some or all of your mortgage while you watch your properties appreciate in value.
Keep Asking for Raises
The cost of living goes up nearly every year, and so does your experience and value to your company. As such, you shouldn’t be afraid to ask for regular raises to keep up with the cost of inflation and be paid what you’re truly worth. This doesn’t mean you should constantly pester your boss about getting paid more, but you should also make the case, when appropriate, that your value should be reflected in your salary. Those who fail to ask for raises tend not to get them, so don’t overlook this source of building your wealth.
Start a Business
Most of the world’s billionaires either inherited their money — which isn’t as much of a strategy as simple good fortune — or started their own businesses. If you’re looking to generate a large amount of wealth, starting and growing a successful company is one of the most likely paths. Of course, entrepreneurship is a risky proposition, as many new companies fail in just the first few years. But if you can create a solid business idea, raise the appropriate funding and get the right people working for you, this high-risk, high-reward path can pave the way to a lifetime of wealth.
Broaden Your Education and Skill Set
If you’re going to spend your life working for others, you’ll have to make yourself as valuable as possible if you want to generate the most wealth. Educating yourself in a wide variety of fields and developing a diverse skill set are some of the best ways to demonstrate your value as an employee. Focus on specialised skill sets that are in high demand, such as those in the high-paying tech and financial industries, to give yourself the best opportunity to grow your wealth rapidly.
Set Up Multiple Streams of Income
It’s hard to generate sizable wealth on a single salary, even if you save a large portion of it. To build wealth fast, set up multiple streams of income. For example, in addition to your day job, pick up a side hustle that matches your talents and abilities. If you’re a freelancer, try to find additional clients in a variety of different industries. Not only will this bring you additional income, it will also help protect you during economic downturns if you happen to lose one of your sources of income.
Live Within Your Means
You’ll never generate any wealth at all if you spend more than you earn. To set yourself up for a lifetime of prosperity, it’s important to create a strict budget and stick to it. Make sure that in addition to all of your unavoidable expenses, you’ve got a significant line item for saving and investments. Every month that you can come in under budget, you’re adding to your pool of lifetime wealth.
Don’t Be Too Conservative
Although being too speculative is a sure-fire way to risk all the savings you’ve worked for, being too conservative can be equally damaging in limiting your wealth. Taking some risks in your financial life — from inves