The 15 Most Important Assets That Will Increase Your Net Worth Overtime
15 most important assets that will increase your net worth – To increase your net worth isn’t as hard as you might think of, your net worth goes beyond just the balance in your bank account but a measure of your overall financial health. Getting the answer to “What is my net worth?”, you should subtract your total liabilities from your total assets. If you are trying to figure out which assets are the most valuable or will otherwise give your net worth an increase, get a rundown of 15 most important assets that will increase your net worth. Read also How To Live A Rich Life In Your 20’s – The 4 Sure Ways To Live The Good Life
Why You Should Work On Increasing Your Net Worth
√ It measures your year-over-year progress.
Your net worth should be increasing year-over-year, especially if you are a pre-retiree. But by how much should it be growing? While there are many things to consider, it depends on your overall financial situation. The experience has been that people who work with an advisor and who know their net worth seem to have a better grasp of their financial situation than those people who don’t.
√ It refocuses your financial emphasis beyond income. The day you retire, especially if, for health reasons, you can no longer work, it is quite possibly the day your savings has to begin supporting you from that day onward and for the rest of your life. Your savings needs to earn income if it’s going to support you through a 25-plus year retirement.
√ It wakes you up to the downside of debt instead of just emphasizing assets. Money not going out is the same as money coming in. Optimistically, you have been working with an advisor for long enough to understand that even $1 million in assets isn’t likely going to be enough for a 25-year retirement if you have a big mortgage and other debt. You don’t need to think of your retirement savings as a big pile of cash that automatically has to get smaller and smaller as you siphon from it to pay your monthly expenses. Instead, try and view your savings and investments as assets you use to generate retirement income.
√ If banks and lenders care, you should too. Most people, one of the ways they will improve cash flow once they retire is to refinance their mortgage out 20 or even 30 years. But once you stop working, you would be surprised at how difficult it can be to refinance your mortgage if your debt is too high, even if you have ample equity in your home. Note that credit and loans are tougher to get when you no longer have a regular salary, so one of the biggest factors in retiree loan worthiness is net worth.
Get to know how you can start making lucrative investments toward your future with 15 most important assets that will increase your net worth. Read also 16 Best Budgeting Tips For Singles That Will Lay The Foundation To Achieve Future Financial Goals
15 Most Important Assets That Will Increase Your Net Worth
1. Owning a Primary Residence
Ranking among the most common ways people gain a substantial increase in net worth is home ownership. Instead of choosing the traditional 30-year mortgage, opt for a 15- or 20-year term, in that way, you can pay it off more quickly, which will result in a significant asset and savings on interest. If you decide to sell after you pay your home off, capital gains are tax-free as long as your status remains married filing jointly. In some cases, renting might make more financial sense than owning homes in high-priced urban areas, depending on whether the cost of ownership is reasonable in relation to total living expenses or not. Read also How To Practically Reward Yourself With Ten Percent Paycheck Savings Every Month
2. Retirement Savings
Also on the 15 most important assets that will increase your net worth is savings towards retirement. Retirement might be decades in the future, but saving now can enhance your net worth better. Saving for retirement is something you can start doing now, with accounts such as a 401(k) or a traditional IRA, or any retirement contributions can help your savings balance grow more quickly. Make it a goal to maximize out your retirement contributions by contributing a set amount each paycheck, especially if there is a company match. By treating your savings contributions as a budget item, you will consistently put money away, which will allow it to grow and increase your net worth overtime. Read also 7 Practical Daily Financial Habits That Will Positively Improve Your Life
3. Second Home
Another one of the 15 most important assets that will increase your net worth is to own a second home. Second homes are a great way to earn passive income in short-term rentals, which can be used to help pay off your mortgage more quickly. Once you pay off the mortgage, you will own a significant asset while still benefitting from the passive income of renting it out if you choose to, both can result in a cool gain in your net worth. Read also 10 Best Ways To Build Wealth Quickly With Or Without Money
4. Rental Real Estate
When you use the bank’s money to acquire rental properties, you are effectively building your net worth. As on of the most important assets that will increase your net worth, once you start renting out the properties, use the income to pay off the mortgages instead of dipping into your bank account. Your properties will gain equity. Also, their market value should increase over time. If you are not ready to acquire properties solely on your own, but you have a desire for real estate, you can get a group of investors to come up with the down payment with the understanding that you will have a percentage of ownership in the property. And once you have successfully financed the rental property, you can negotiate a fee from the investors for its management.
5. College Savings
Most parents assume ownership of a 529 college savings plan for their children, which increases their net worth until it’s time to use the money for school. 529 plans grow tax-free and distributions are also tax-free as long as they are used for qualifying educational expenses. The funds can also be transferred between beneficiaries without penalties or taxes. For instance, funds could be divided between multiple siblings. This as well, the most important asset to grow your wealth. Read also 8 Simple Ways To Grow Your Bank Account In A Month
6. Quality Household Items
Household items as part of the most important assets that will increase your net worth, you might not be considered a new refrigerator or laptop a way to increase your net worth but consider the big picture. Just like when buying a vehicle, it pays to buy the best quality, longest-lasting products you can afford while also considering the rate at which these items depreciate. Constantly paying repair bills and replacing appliances can be a costly endeavor, but buying quality long-lasting items increases your net worth because it leaves more money in the bank. To determine which brands and models are the best investment, read reviews, compare products and find the best deals to help buy quality items.
7. Invest in Education
15 most important assets that will increase your net worth – You might not have thought of it this way, but your education credentials are among your greatest assets to ever posses. Choosing to invest in your own education to qualify for a better job or gain a promotion can help you reap significant financial gain over time. And your education doesn’t have to end when you receive your bachelor’s degree or so. To help pay for the cost of continuing education classes or certifications, you could opt to take out a student loan from a credit union if it has in-school student loan options and parent loan options.
If you are still not convinced enough, consider this, With a savings account paying 2% interest, you would have to save $300,000 before you would see $6,000 in additional income, an amount that can come much more quickly from an annual raise that you earn as a result of further education. Read also 21 Woeful Budgeting Mistakes To Avoid Right Now
8. Maintain Your Home
Your home is likely one of your largest assets you have, it makes sense to invest in maintaining it regularly. Things such as replacing your roof, maintaining your gutters and regularly servicing your HVAC system can get you a better return when it comes time to sell. On the other hand, neglecting your home can give potential buyers opportunities to use lack of maintenance as a way to negotiate a cheaper price, leaving you with lesser money bid in the end.
9. Smart Investments
Investing can be a good income strategy but it’s not a sure thing always. You need to take the time to research investments well before you commit. You will also need to have a clear understanding of when to buy and when to sell stocks. If you are inexperienced in the stock market, you don’t have to go it alone, you should seek out advice from an investment advisor to help you pick the best stocks for your portfolio based on the type of risk you are comfortable assuming and the return you would like to earn on your most important asset. Read also 31 Major Retirement Threats To Avoid And Retire Comfortably
10. Permanent Life Insurance
Also among the 15 most important assets that will increase your net worth is a permanent life insurance. Many people assume they can’t access their life insurance unless something happens to them, but that isn’t always true. If you have a permanent life insurance policy including a whole life, universal life or variable life policy, the premiums you pay will grow tax-deferred. Once the policy has reached a certain cash value, you can access the funds tax-free. The accumulated cash, less any fees, counts as an asset that can increase your net worth as time goes on. Consider working with an independent life insurance broker if you are interested in getting permanent life insurance.
11. Private Lending
Considered among the 15 most important assets that will increase your net worth is private lending. Being someone else’s bank allows you to generate passive income that can boost your net worth. Private loans, notes and trust deeds are investments where you lend money to private individuals or entities in exchange for interest.
With these type of investments, you can still receive a consistent rate of return regardless if the value of the underlying asset goes up or down, which transforms into funds you can choose to reinvest and gain more wealth. In order to protect your interests, make sure you understand the pros and cons of a potential investment, consider consulting a professional with extensive experience for advice, like a broker, properly licensed partner and entity. Read also 20 Creative Strategies To Save Money In Daily Life – The Smart Guide To Gain Control Of Your Financial Future
12. Income From an Extra Job
Choosing to take on a side hustle amongst the 15 most important assets that will increase your net worth. Getting a side hustle can get you some extra cash, and as long as you save or invest the money, you will increase your net worth significantly. Consider doing jobs that pay enough to make them worth your time, such as finding and reselling items for a profit, driving for Uber, becoming a virtual assistant or writing resumes to help fetch you much money which can increase your net worth significantly.
13. Invest in Collectibles
Collectibles can be most important asset than just being a hobby. They can serve as a boost to your net worth, especially if you become an expert in a certain area such as investing in fine art and antiques. But just because a collectible item was lucrative in the past doesn’t mean it’s still a good investment. That’s why it’s important to educate yourself. Visit with reputable pawn shop and gallery owners, as well as other experts in the field to gain the knowledge you need to invest in collectibles that will add to your bottom line of net worth. Read also The Definitive Guide To Choosing The Best High Interest Bearing Savings Account
14. Choosing Quality But Affordable Vehicles
The kind of cars you drive can put a great dent in your residual income. Flashy sports cars and luxury automobiles are nice, but along with hefty monthly payments. They are also the most expensive to insure as well. Get the most from your investment in a car by researching factors such as reliability, safety features, maintenance expenses over time and the cost of insurance before making a purchase. If you are not sure where to start, you can use a car-buying service to make the process easier for you.
Buying a dependable vehicle that will hold it’s value for years after you pay it off can keep you from the expense of having to purchase a new vehicle every few years, which can decrease your net worth badly.
15. Invest in Good Health
Having good health is a critical asset to building your net worth. It allows you to work more hours and be more productive without spending a bundle on medical appointments, treatments or surgeries. Invest in good health by eating well, exercising and visiting your doctor for regular checkups can be attributed among the 15 most important assets that will increase your net worth. Read also 3 Key Steps To Becoming Financially Independent For Early Retirement