Most people know that they need to save money to secure their financial future. But for many people, that’s not enough. To ensure a comfortable retirement or just peace of mind in case of an emergency, you must increase your assets. That might sound complicated, but it’s easier than you think! Here are simple ways to get started.
What Is an Asset?
Understanding how to increase your assets helps to know what they are. Simply put, an asset is something you own that has monetary value. For example, houses, stocks, bonds, art, and jewelry appreciate over time and can be sold for cash when needed. Assets might also include personal property like furniture or other belongings. Assets do not include liabilities, like the mortgage on an overvalued home, student loans, car loans, or credit card balances.
How to Increase Your Assets
There are many ways to increase your assets. One is homeownership—buying a home with an affordable monthly mortgage payment gives you the ability to live in it while it increases in value over time.
Another way is saving money—having money saved up for emergencies, or other unexpected events can save you from high-interest credit card debt and keep you from dipping into home equity to cover expenses. Still, another is looking for ways to increase your income, such as taking on a second job or starting a home business.
Another way is to increase the value of your home. A home contractor can help you with home improvements and repairs that boost the value of your home and increase your assets. Even small changes like installing energy-efficient appliances or adding luxury upgrades like a home theater system can make a big difference.
Tips for Increasing Your Assets
To increase your assets, you must be patient and not get discouraged. Financial investments can go up and down in value, but over time they should grow. Look for ways to save money and invest early to have more assets when you retire than if you do nothing.
Ensure that your home is the best it can be, both inside and out. New windows or a fresh coat of paint in all rooms can improve curb appeal and increase the value of your home.
When investing in an individual retirement account (IRA), choose investments that are low risk but with potential for high return. That way, you will still have some liquidity if you need to access your money in a hurry.
The Benefits of an Increased Net Worth
An increase in assets can bring many benefits. It can mean having more money for retirement, being able to save up for a new car or college tuition for your children without taking on debt, and generally feeling more secure about your financial future.
To get started increasing your assets, talk to a trusted financial planner or bank officer who can help you set up a plan that works for you. It’s important to know how much money you need to retire comfortably and start now, even if it’s only with putting aside $5 per week at first.
The Importance of Paying Off Debt and Saving Before Investing
Debt can be a dangerous thing. Not only can it keep you from reaching your financial goals, but it can also be risky. Here are three reasons you should pay off your debt as quickly as possible.
The first reason is that debt can keep you from reaching your financial goals. For example, if you’re paying off high-interest credit card debt, you might not have enough money left over to save for a down payment on a house or invest in a retirement fund.
The second reason is that debt can be risky. If you’re not careful, you might end up owing more money than you can afford to pay back. This could lead to defaulting on your loans, wage garnishment, and even foreclosure on your house.
The third reason is that paying off debt quickly can save you money in the long run. The sooner you get out of debt, the less interest you pay overall and the more money you get to keep for yourself. If you have $10,000 in credit card bills with an 18% annual percentage rate (APR), paying it off in 18 months instead of five years will save you $5,725.
Increasing your personal assets can seem daunting, but it’s a necessary and helpful part of planning for your financial future. Being smart about investing and building up a sizable retirement fund can help you avoid taking on debt to cover expenses in old age, so it’s important to be patient and follow a plan that works for you.