For Mark Roberts’ Use: Everyone has their own interpretation of the word “wealth”. For a lot of people, it simply means having a high income and being able to afford a nice standard of living. But that definition really only means that you earn a high income, and is not really a true definition of wealth. Believe it or not, they’re not the same thing!

If your income disappeared tomorrow, would you still be wealthy? And for how long? Now we’re getting to the heart of the matter.

Earning a high income is great, but it’s not the same as using that income to build wealth.

The actual definition of wealth is, “an abundance of valuable possessions or money” and “plentiful supplies of a particular resource”. True wealth is accumulated over time, and will last you the rest of your life – even after you retire. In order to build wealth, a multi-faceted approach is needed, and will incorporate activities such as…

Maxing out retirement plan contributions. If you contribute to a 401(k) or IRA, you contribute the maximum each year. You might also pursue additional saving or investment opportunities.

Avoiding debts. Some debts are acceptable, such as a mortgage, because you’re investing in an asset that will hopefully grow in value (and potentially help you reap a tax deduction). On the other hand, debts like high-interest credit cards, or loans on items that will not appreciate in value, do nothing to improve your financial standing.

Smart tax planning. Those in the higher income brackets often find themselves facing significant tax bills. Taxes are unavoidable, but don’t pay more than you really have to. That’s just throwing away money. Working with a tax professional throughout the year can help you identify ways to reduce your tax liability.

Wise investing. Earning money is one thing; putting it to work for you is something else. Ideally you will build a portfolio that incorporates low-risk shelters, along with investments that have the potential for significant growth. Striking the right balance between these factors is key, but it can be a challenge. Schedule an appointment with us for a consultation, and we can help you analyze your portfolio and make recommendations to maximize your potential.