Wealth is often perceived as an unattainable dream, typically associated with celebrities, hedge fund managers, or billionaires. However, the concept of wealth is subjective and can manifest in various forms, such as physical assets, increased income, and high returns on investments. Despite high inflation, the American economy remains robust, making it an opportune time to grow your wealth. Financial experts reveal several subtle strategies that Americans are employing to enhance their wealth.
Investing in High-Yield Savings Accounts
One of the most straightforward methods to increase wealth in the current economic climate is by investing in high-yield savings accounts. Justin Godur, a finance advisor and founder of Capital Max, highlights the advantage of high interest rates, which have significantly boosted returns on these accounts.
“With the current interest rates on the rise, one of the simplest yet most effective strategies has been shifting funds into high-yield savings accounts,” Godur explains. “I’ve seen clients earn significantly higher returns compared to traditional savings accounts, making this a no-brainer for anyone looking to optimize their savings without additional risk.”
Diversifying with Real Estate Investment Trusts
Diversification is a fundamental principle of wealth growth, and real estate investment trusts (REITs) offer an excellent opportunity to diversify without the complexities of direct property management. Godur notes that his clients have benefited from steady income streams and capital appreciation through REITs, particularly as the real estate market remains resilient.
“REITs offer a way to invest in real estate without the hassle of direct property management. My clients have enjoyed steady income streams and capital appreciation from REITs, especially as the real estate market continues to show resilience,” Godur says.
Utilizing Tax-Advantaged Accounts
Tax-advantaged accounts, such as IRAs and 401(k)s, provide an effortless way to grow wealth by reducing taxable income and leveraging employer match programs. Godur emphasizes the dual benefits of these accounts: immediate tax relief and long-term growth.
“With strategic planning, my clients have not only reduced their taxable income but also leveraged employer match programs to boost their retirement savings,” he explains. “This approach has provided immediate tax relief and long-term growth, creating a win-win scenario.”
Self-employed individuals can also benefit from these accounts, enjoying tax advantages and the power of compound interest.
Investing in Rental Properties
Real estate remains a lucrative investment, particularly for those who invest early. Mark Pierce, CEO and founding partner of Wyoming Trust, notes that the real estate market is thriving, with rental properties performing exceptionally well.
“Real estate is doing better than ever for clients who invest early,” Pierce states. “Short-term rentals for local and international tourists and long-term leases for off-campus students are among the best performing on the market right now.”
He acknowledges the challenge of rising housing costs but points out that offering rental options where multiple tenants can share costs benefits both landlords and tenants.
“It’s a bit of a double-edged sword because the spike in housing prices has slightly upped profits for landlords, but it’s still a pain for tenants. So offering these two types of apartment options where multiple people can split the cost for accommodation works out to the advantage of both property owners and occupants seeking more affordable housing.”
Maximizing Credit Card Rewards and Bonuses
Another savvy strategy involves maximizing credit card rewards and bonuses. Abid Salahi, co-founder of FinlyWealth, explains that disciplined and strategic use of credit cards can yield substantial financial benefits.
“With strategic planning and discipline, savvy consumers can amass tens of thousands of dollars in cash back, travel credits, and other valuable perks annually,” Salahi says. “At FinlyWealth, we’ve seen a remarkable 35% increase in users actively pursuing reward optimization compared to 2023.”
He shares an example of a retired couple from Arizona who earned over $7,500 in travel credits last year by strategically timing their credit card applications and meeting minimum spending requirements through careful budgeting.
“They used these credits to fund an all-inclusive Caribbean vacation, something they wouldn’t have been able to afford otherwise on their fixed income,” Salahi notes.
Embracing New Investments
Americans are increasingly exploring newer investment opportunities. FinlyWealth data shows a significant increase in users allocating funds towards alternative assets such as real estate crowdfunding, cryptocurrency, and peer-to-peer lending platforms.
“Our data shows a 22% uptick in users allocating funds towards alternative assets like real estate crowdfunding, cryptocurrency, and peer-to-peer lending platforms,” Salahi explains.
While these investments carry inherent risks, they offer the potential for higher returns when approached carefully and as part of a diversified portfolio.
In summary, Americans are adopting a diverse array of strategies to grow their wealth. By leveraging high-yield savings accounts, diversifying with REITs, utilizing tax-advantaged accounts, investing in rental properties, maximizing credit card rewards, and embracing new investment opportunities, they are capitalizing on the robust economy and ensuring their money works for them.
