It’s safe to say most working adults are planning for retirement in one way or another. Even more likely is that they have one common financial goal in mind: to be able to retire comfortably and enjoy our golden years. What some may not be considering though, is whether they’re employing the right strategies to maximize their current income and grow their future wealth. Rather than thinking outside of the box, they are stuck inside the box of conditioned thinking.
What’s in the Box?
Financial strategies and tools found inside the box are ones we’re all familiar with; 401(k) investment accounts, Roth IRA, and other tax-deferred strategies. While these go-to strategies seem like safe options, there are two problems with relying solely on investment accounts to grow wealth. The first lies in maintaining the mindset that investment returns earned from these products will always be in your favor. The second is believing those investments will finance your financial future.
Intending to grow wealth based only on investment portfolios can be harmful to your future financial health. Not only can the stock market fall drastically at any given moment, but fees also reduce your money’s ability to grow. The amount you pay to have an investment portfolio managed is determined by the total balance of your account. As your wealth grows, so do the fees. For every dollar paid towards fees, you’re losing out on compounding interest.
Also inside the box is believing wealth is determined by our net worth and assets. Yes, they do provide an indication of financial wealth, as well as financial health. However, the things that contribute to your net worth are often tied up in ways that limit your ability to access them. So, while your net worth may be a healthy number, you likely lack fluidity and control over that wealth.
Take Control by Thinking Outside the Box
When you think of your financial future, do you think of having complete control over your money? I hope so! Understandably, the knowledge that common strategies can actually harm future wealth can make it seem impossible. However, with outside the box strategies, you can take control of your money.
This doesn’t mean forgoing traditional strategies, either. In fact, one of the best ways to take control and grow wealth is by combing stock investments with products backed by actuarial science. Employing a strategy that utilizes both a 401(k) and an insurance-based product like whole term life insurance gives you more bang for your buck. This strategy has many benefits including:
- Assigning more than one function to your money
- Not having to worry about obtaining access to your money quickly during an emergency
- Guaranteed cash flow for the rest of your life
When the risk is running out of money during retirement, finding optimal ways to make your money work for you is essential to planning for the future.
Adopting a Sage Wealth Strategy
It’s important to note not every strategy works for every person. Determining which strategies and tools are right for your situation is part of the process. You need to make sure you’re asking the right questions and utilizing strategies that align with your beliefs and financial goals. After all, a poor carpenter with great tools is still a poor carpenter.