Friday, December 2, 2016

Who Said You Need To Be Rich To Build Wealth?

Perhaps the most common misconception I've encountered when working with new clients, particularly younger ones, is that investing requires a large amount of capital to begin. This couldn't be any further from the truth. I think most millennials (born 1980-2000) or Gen Xers (born 1960-1980) see the financial industry as a bunch of old men with grey hair in outdated suits. Furthermore, I believe these generations get the impression that advisors will never give them the time of day because they don't have nearly enough money to be considered relevant. While this attitude can certainly hold true in many firms, I've taken it upon myself to ensure that my firm doesn't fit this stereotype.
Not only do I think it is important for people to begin investing early but also that they're given the best advice whether they're investing $100,000 or $1,000. Establishing strong investing habits early on is extremely important to ensure investors reach their financial goals. Unfortunately, I can't say that many other firms in my industry share this belief. I've been to many conferences where I've heard older advisors say that they refuse to work with younger clients because of their lack of assets. While I think this grave mistake is going to cost them dearly later on, I see opportunity in their shortsighted vision.
I've worked with many clients in establishing an investment plan where they have begun by putting away small amounts each time they get paid. As an example, the maximum amount you may contribute to an IRA is $5500 per year (at age 50 it's raised to $6500/year). Let us assume you make an initial investment in your IRA of $700. If you can have an automatic deposit of $200 taken from your bank and put into your IRA every two weeks you'll stash away an additional $4800 per year, putting you right up to that maximum contribution limit. Or, suppose someone can only put $300 away monthly, this still gets them to $3600 a year, not bad! I have some clients who prefer to make a larger up front deposit and others that prefer a smaller one. Regardless of your preference the result is the same.
Sure, life would be a lot nicer if you could afford to make a one-time $5500 deposit each year but not everyone has that luxury and that's okay. We all have our expenses and financial priorities but building long term wealth should not be one that gets pushed to the back burner. Current investors are placed in a unique conundrum being that pensions are nearly extinct and many are questioning if social security will be around when it's their turn to collect. All the more reason why starting an IRA early and contributing to it regularly has become so vital to your financial health.
My firm has built a remarkable team complete with; CFP's, CPA's, attorneys, and insurance experts all in our network. I truly believe that in this day and age everyone deserves a comprehensive, all-inclusive team to service them and all their financial needs regardless of how much they're able to contribute to their accounts. With that said, I urge you, if you haven't done so already, to evaluate your current spending habits and find areas where you can redirect money into investments that will aid in building your wealth.

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