Where are you headed this year?
I don’t mean New Year’s resolutions (I think you know my stance on those by now!).
If you want to make a change, you can take control and do it at any point in your life. 1st January isn’t some magical day you have to wait for. And at the time of writing this, we’re now in the third week of January and most people’s resolutions will have fallen by the wayside anyway.
What I’m talking about are your goals for this year. The things you REALLY want to achieve.
They might be business goals; they might be personal goals or most likely, a combination of both.
But as business owners and entrepreneurs, we all need to have a clear idea of where we’re heading. After all, you wouldn’t get on a bus that didn’t have the destination printed on the front of it.
And whatever you want to build, NOW is the perfect time for you to start taking action and moving forward.
The other powerful reason to have a crystal clear picture of where you’re heading this year, is so that as you work towards it, you can put some milestones in place and tick things off along the way.
That way, you know you’re making progress instead of setting some big goal and then getting demotivated and falling off track when it still feels so far away.
The #1 reason women come to me is because they want to grow their wealth.
Their business is doing well and they’re making more money than ever before. But they don’t feel like they’re using that income well. They want to use their money to make more money – which is, after all, the original passive income (compared to writing a course or a book or a song and having money come in while you sleep).
It’s about having assets that create income and grow. And then the growth grows, which is what compound interest is and compound growth, and why it’s so valuable.
So today, we’re looking at 3 big things to consider, if you want to grow your wealth.
1. Conventional Assets (stick with me here!)
I know conventional assets aren’t the most exciting things to talk about – things like pensions and ISAs and other investments.
But they are an incredibly important part of growing your wealth, because they give your money the best chance of growing to beat or match inflation over the long term.
Now this is not money that you might want to spend on a holiday next year or keep in your emergency savings. This is money you’re prepared to put away for 5-10 years (or even longer) towards your biggest life goals and even your retirement.
Which – let’s face it – is likely to be a time when you want to work less hard, rather than hang up your boots completely.
Choosing to invest in a pension or ISA depends entirely on your personal circumstances. Pensions are great because you get tax relief, but you can’t access the money before you’re 55, which could be a fair way off yet.
You don’t get a tax relief on an ISA but when you take the cash out, there’s no further tax to pay. So for most people, a balance of these two means they have the growth they want AND can minimise the amount of tax they need to pay when they get towards retirement.
Which can only be a good thing!
The next thing that most people then consider is property.
Maybe you own your own home already and by the time you retire, you’ll have paid off your mortgage.
But in addition to your own home, having a property that you rent out and have income coming in from can be a valuable income stream for some people.
It’s not for everybody! Because at best, it’s a semi-passive income stream. It’s never going to be completely passive because you need to find tenants; vet them; make sure they pay their rent on time and so on.
Even if you decide to pay a managing agent to take care of the tenancy side for you, it’s still going to involve some work on your part – things like finding the property; funding repairs or maintenance and arranging tradespeople.
And when the time comes and you want to get your money out, you’re going to have to sell the property, which is one of the biggest property pitfalls that most people don’t think about.
I hear it all the time, people saying “I don’t need a pension because I’ve got property” or “my buy-to-let is my pension”.
The problem with that is if you need money quickly, getting it out of a property is not an option.
If you or a loved one became ill or had an accident, for example, and you wanted to pay for private medical treatment because the NHS waitlist was just too long to be feasible for you – having all your money tied up in property is not going to be the answer.
You might need to wait 6 months until your tenant’s contract ends, to get them out. And in the meantime, you’ve got to find a buyer. You may well have to renovate it or at least do some work, especially if your tenant has been living there for a while. And the whole process of buying and selling house can be lengthy, costly and time consuming.
So having some of your money in other assets you can access fast – like pensions and ISAs – means you have the option of getting the money quickly when you need it.
This is why diversifying your assets is so important.
It’s also fair to say that while house prices are still climbing right now, and have been for some time, there’s a lot of talk about the fact that they may stop going up or even drop in the future.
What you don’t want is to tie all your money into property where, if you needed to pull it out quickly, you could end up having to sell a property for less than you paid for it. And be left with very little equity by the time you’ve paid off the mortgage and the solicitors fees and all the other expenses that come with selling a house.
So while it can be a great option for some, growing your wealth is all about having a range of things in place that can help. Property definitely isn’t the one-stop solution that many people seem to think (and which all those TV programs might have you believe!).
And the final thing we’re looking at today:
3. Non-Standard Assets!
As the name suggests, these are assets that are a little bit more unusual or quirky.
I’m NOT saying this is where you should put all your money, for obvious reasons!
But if you’ve got a passion for fine wines or antiques or motorbikes or gold jewellery – or anything else you could buy and hold over time, which is likely to go up in value – they can make great assets that you can always sell further down the line, if you need or want to.
Non-standard assets like these are all ways of building wealth and creating assets that mean that your money is working for you, rather than just sitting in a bank account.
Bank accounts don’t pay good rates of interest. If you just leave the cash sitting there, inflation means that your money is worth less this year than it was last year. And I know you don’t want that!
By this point, I’m guessing you’re probably now thinking one thing:
So which of these is best for me, to grow my wealth?
And I can’t give you that answer (at least not here in a blog!).
Now you know more about your options, it’s about better understanding the pros and cons of each, so you can make an informed choice about the best way forward for you.
Of course, if you want to come and work together 1:1 to create a bespoke plan, I’m more than happy to help!
But I know that’s not for everyone. Not everyone has the time to work with a Financial Adviser or Money Coach. Or maybe you’re just not at the stage where you’re ready to invest in 1:1 work yet, both of which I totally understand.
Which is one of the reasons my EPIC NEW BOOK is out this month…
It’s been an incredible journey to write (honestly, I’m so proud to see it out there in the world!) – to help you get started with the things you need to do, to make sure your money is where it needs to be and that you are GROWING your wealth, without ever worrying the money will run out.
Here’s to making 2022 the year your money works as hard as you do!
Until next time,