To calculate your net worth, you must subtract your total liabilities from your total assets. The greater the value of your assets, the more your net worth will be. So which assets should you invest in to boost your net worth today? Here are a few suggestions.
Real Estate
Real estate is one of the best ways to build wealth. The market may not be at its best, but the overall trajectory is a positive one. And the reduced competition can increase your chances of landing a great deal.
You can gain wealth with property ownership in the following ways:
Purchase a Primary Residence: Home ownership is one of the most common ways to boost net worth. Choose a 15- or 20-year mortgage rather than a 30-year one to pay off your home quickly, reduce interest expenses and gain wealth. You may also sell after your home is paid off to earn tax-free capital gains which will apply if your tax status is married, and you file jointly.
Purchase a Second Home: A second home will increase your real estate portfolio. It will also bring in extra income through rentals. You can use the rental income to pay off your home quickly and further boost your net worth.
Home Maintenance and Improvements
You will increase your net worth by adding value to your home. Conversely, a home that’s not well-maintained will lose value and lower your net worth.
Maintain your wealth by keeping your home in good shape. Or boost net worth with value-adding remodels. Take steps to prevent the home from falling into disrepair.
Retirement Savings
It’s never too early to invest in retirement savings. You will grow your wealth quickly by investing in tax-deferred accounts like 401(k)s or traditional IRAs. Max out your contributions by setting aside a specific amount from each paycheck. Employer contributions will further help you reach your financial goals.
Education
Education might not be the first thing that comes to mind when you think of building wealth. But it can help you qualify for higher-paying jobs and gain promotions that benefit your financial situation. Student loans will temporarily add to your liabilities, but they are lower interest than private loans.
College Savings
Parents that invest in a 529 college savings plan will increase their net worth until they cash it out for school expenses. The money will grow tax-free. Distributions are also tax-free if they are used towards eligible education expenses. Funds can be transferred between beneficiaries without taxes or penalties.
Job Income
Your job income accounts for a good portion of your net worth. You can increase your wealth through job income in the gig economy. Consider driving Uber or opening your own eBay store. You can also ask your employer for a raise or promotion.
Owning a Vehicle
Vehicle ownership is a slippery slope. The car itself will increase your net worth. But factors like maintenance, repairs, payments, and insurance add to your liabilities. For best results, invest in a car that’s safe, reliable, and dependable.
Investments
Investments are risky. Make a smart investment, and you will increase your wealth. The wrong investments will reduce your net worth. Seek guidance from an investment advisor to ensure you are investing wisely.
Household Items
Your home plays a major role in improving your net worth. And so do the items in it. Large appliances like refrigerators, dishwashers, and washer/dryers are part of your wealth.
Appliances can also lower your wealth considering payments and expensive repairs. It’s important to buy quality items that withstand the test of time. Research carefully to ensure you make a smart investment.
Private Lending
Private lending will help you generate passive income and increase your net worth. You can loan money to individuals or business entities to earn interest. It will produce a consistent rate of return regardless of the asset’s value.
Inexperienced private lenders run the risk of the borrower defaulting on the loan without recourse. Consult with a broker or another licensed professional to keep your assets protected.
Health
Health may not be an obvious source of net worth. But individuals that maintain good health are more productive. They also reduce medical expenses. Eat right, exercise, and stay on top of medical appointments to be healthy, wealthy, and wise.
Life Insurance
The premiums you pay on certain life insurance policies, like universal life, whole life, and variable life policies, will grow tax-deferred. Once they reach a certain cash value, you can access the fund’s cash free. The accumulated money will add to your net worth.
Collectibles
Collectibles are more than a hobby. They can be a wealth-increasing asset.
The items you collect matter. Stay away from items, like rock star memorabilia, that have values that will wax and wane with the popularity of the celebrity. Fine art, antiques, and wine are better investments. Talk to pawn shops and gallery owners to determine which collectibles will increase your wealth.
Several assets affect your net worth. Smart investments will help you grow your wealth. Which of these items will you add to your portfolio?
