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Building Wealth Isn’t Just For Experts – Here’s How
Building your wealth is really not that complex – all you need is some planning and dedication.
Money Doesn’t Grow On Trees
Unfortunately.
Still, most of us hope for a comfortable and debt-free life – which is why it’s important to plan your finances and build your wealth. You may have been exposed to your fair share of get-rich-quick schemes or even tried your hand at it, but those usually come with huge risks that have caused many to lose money in the end.
So, how about adopting a more sustainable financial plan to grow your wealth and reach your financial goals! Read on to find out how.
Your 3 Steps To Building Wealth
Money may not actually grow on trees but your steps to “growing” it can be likened to parts of a tree:
Half the battle is won when you follow these 3 simple steps and cultivate a long-term mindset!
1. Earn
This may seem like a no-brainer, but it is also the most overlooked step. Many tend to think about saving first when it comes to growing wealth, but that brings us to the key question: How do you have the money to save in the first place?
You earn it, of course!
Earning is the root of your wealth-building and is what anchors the next 2 steps. Without a source of income, it’s hard to think about saving, much less investing.
For those who are just starting out, the money you earn is likely from an active income, that is, your paycheck from what you do for a living. There are other forms of income, such as passive and portfolio incomes. The latter refers to income you get from other sources, like stocks, funds and other investments. But this is something we will touch on more deeply when we get to Step 3.
Tip: Here’s how you can maximise your salary! Credit your salary with UOB One Account, and spend a min. of S$500 on an eligible UOB card to earn 7.8%p.a. from your first dollar.
2. Save
Just earning money isn’t enough if you want to build wealth. Someone who splurges all their hard-earned money certainly won’t.
So, rather than spending it all, setting aside an amount to be saved will help you accumulate funds and achieve your financial goals in the long-run. It’s also vital to save enough for times of emergency so that you’ll have sufficient money to help tide you over tough times or unforeseen circumstances.
Tip: Receive a UOB debit card when you open a UOB Stash Account and get up to 10% cashback on online shopping, groceries, transport and more. Plus, track your interest easily via UOB TMRW.
But we understand that this is all easier said than done. If you wish to see your plans to save come into fruition, creating a budget may be a good place to start. It may sound complicated to those new to it, but not to worry! You can check out the basics of budgeting for a clearer picture. From the zero-based budget to the 50/30/20 plan, you can also explore some popular budgeting plans and see which suits your lifestyle best.
3. Invest
This may be the most important step to building your wealth, as you’ll be converting your hard-earned savings into assets that will grow and create more value.
Remember “portfolio income”? Any qualified dividend income, capital gains or interest you earn from investments are considered portfolio income. These allow you to have some form of cash flow without actively performing work or earning money.
Don’t know where to start? Some common investment options include:
- Shares
- Bonds
- Unit Trusts
- Exchange traded funds
- Real Estate Investment Trusts
- Annuities
There’s another simpler way to start. With SimpleInvest, all you need is S$100 per month to choose from portfolios managed by experts based on your goals and risk appetite!
It’s Never Too Late To Start Planning
If you haven’t taken steps to grow your wealth, don’t worry.
While it’s always better to start planning early, you can still do it at whatever life stage you’re at.
A solid financial plan will also include identifying your goals, like saving to purchase the latest iPhone or even your first BTO. Once you’ve done that, simply follow the 3 steps above to make headway towards your more resilient financial future!
Credit and Citations
Miriam Caldwell, How to Begin Building Wealth, https://www.thebalance.com/how-do-i-begin-to-build-wealth-2386145
E. Napoletano, How to Build Wealth, https://www.forbes.com/advisor/investing/financial-advisor/how-to-build-wealth/
How to Build Wealth Fast, https://www.gobankingrates.com/money/wealth/how-to-build-wealth-fast/
Ben Geier, 10 Common Types of Investments and How They Work, https://smartasset.com/investing/types-of-investment
3 Types of Income Explained, https://www.capitalone.com/learn-grow/money-management/types-of-income/
Building My Wealth, https://www.guardianlife.com/investments/how-to-build-wealth
