When it comes to financial security, one of the major issues many people have with the concept is how distant it feels. Many of us are familiar with the idea of struggling with money. You feel like you’re on uneasy ground today but are motivated by the proverbial carrot that if you make a few key moves, things will be much better off.
But how long do you have to wait for that to happen? If you make the wrong move right now, how long will it take to realize it? Will you have the opportunity to correct things before it’s too late? Will it all be worth it in the end? The answers to questions like these are things that many people struggle with.
In reality, it’s a good thing that financial security isn’t as easy as flipping a proverbial light switch. If it were, it would likely be able to disappear just as quickly – meaning that nothing was ever as “secure” as you’d thought it was. Thankfully, there are several ways that you can jump-start your wealth-building journey.
The Potential of Real Estate Investment
One great way to build your nest egg is through real estate investing. Depending on your risk tolerance and how quickly you’d like to see results, you have a few options available.
If you’re looking for something that moves faster than a traditional real estate investment, you could always experiment with wholesale real estate. The added benefit is that you don’t have to worry about making a significant up-front investment in the form of a down payment.
With wholesale real estate, you only need to identify a property with a lot of potential. Distressed properties in up-and-coming areas make great candidates to that end. Then, you negotiate a purchase price with the seller. At that point, you find a buyer interested in the property and negotiate a second, higher price. The difference between those two prices is what you make in profit.
You aren’t necessarily going to make as much as you would if you’d invested in real estate and held onto a piece of property for 10+ years, but this is more than enough to get you started. If nothing else, it can be a viable way to expand your network of buyers and sellers that you can draw from in the future.
You can even use it as an opportunity to move into rental properties, which can yield an average 8% to 12% return on investment over time.
Smart Debt Management
Another way to start building your nest egg involves smart debt management. That is to say, absolutely every financial move you make—from taking out a loan to opening a new credit card—needs to be purpose-driven. You shouldn’t do something simply because you want to; you should do it because it represents another critical step toward your larger financial goals.
Knowing the difference between good and bad debt (and acting accordingly) is critical. “Good debt” is low-interest debt that can help build your net worth over time. That means home mortgages, student loans, auto loans, and more. “Bad debt” examples tend to be things with higher interest rates, especially credit card debt or payday loans.
Even personal loans are generally considered bad debt unless you use them for something like debt consolidation.
Leveraging Tax-Advantaged Accounts
Someone once said, “The only two certainties in life are death and taxes.” But just as there are certain things you can do to preserve your health, like exercising and eating properly, there are also steps you can take to fend off Uncle Sam – at least as much as possible.
In terms of building your net worth and forging your nest egg, that means leveraging as many tax-advantaged accounts as possible. Tax-deferred accounts are ones that you fund with pre-tax income. Tax-exempt accounts are ones that you fund with money that has already had taxes taken out.
Examples of tax-deferred accounts include but are not limited to ones like 401(k) accounts, 403(b) accounts, traditional IRAs, 529 plans, and more. Tax-exempt accounts include Roth IRAs, Health Savings Accounts, and Roth 401(k) accounts.
The odds are slim that you’ll be able to take advantage of all of them, but when the opportunity presents itself, it’s absolutely one you should embrace. Money from something like a 401(k) can come right out of your paycheck, so it doesn’t even feel like a “loss” at all.
Financial Security Takes Time and Patience
Overall, if financial security seems a bit distant, that’s because it essentially is. But that’s okay because, as another old saying reminds us, “slow and steady wins the race.”
Anything quickly gained is just as easily lost. Instead, what you’re trying to do is establish a rock-solid foundation from which to build from moving forward. Even real estate isn’t destined to make you a millionaire overnight. But what it can do is supplement all the other investment moves that you’re making. It can help fortify your efforts, ensuring you’re not susceptible to one single point of failure.
You probably have several critical financial goals that you’ve created for yourself. Maybe you want to save up to buy a house. Maybe you want to have a certain amount of money to retire. It doesn’t matter how distant they seem. You can turn that vision into a reality. Countless people do it every day. They simply lean into a lot of the strategic decisions outlined above. But critically, they also have the perseverance – and the patience – necessary to create a strategy and see it through to the end.
So long as you know that this is the path you’re creating for yourself before you take that formidable first step, there won’t be much of a limit regarding what you’ll be able to accomplish.
