Many people in today’s society are struggling to get by, and they have no idea how to effectively grow their wealth. In reality, there are only two ways to make money. You can work to make money or you can get your money working for you. If you are not using your money to make money, you are only taking advantage of one of the ways that you can earn. If you want to have a realistic chance of growing your wealth and beating inflation, you’re going to have to get your money working for you. A qualified financial advisor will be able to help in this area.
The Power of Compound Interest
When working with a financial advisor, you’ll learn about the power of compound interest. Compound interest is a concept that involves a sum of money earning interest on a regular basis. The interest earned is added to the principal amount, and then interest is accumulated on that new total. By doing this, you can grow your wealth substantially over a period of several years.
Choosing an Investment Account
One of the advantages of working with a financial adviser is that they can help you choose the right type of investment account to work with. For instance, if you are just trying to set aside a little bit of money to grow your wealth and make a big purchase in the future, a regular investment account may be best. If you want to grow your wealth so that you can retire comfortably, choosing a qualified retirement plan will be the route to take. There are several different retirement options that you could choose such as a 401(k), IRA or Roth IRA. Your financial advisor will be able to show you the benefits of each type of plan and help you choose the one that makes the most sense for you.
Choose Portfolio Allocation
Depending on how old you are and how much risk tolerance you have, your financial advisor will also be able to help you come up with a portfolio allocation that works. The concept of portfolio allocation deals with choosing different asset classes to meet your goals and minimize risk. For example, if you are younger, putting a majority of your money into stocks make sense because you have a long time to make up for any fluctuations in the market. As you get older, transitioning over into its income securities like bonds will help preserve the wealth that you have created early on
After the proper portfolio allocation is created, the advisor will also be able to help you choose individual investments to put your money into. This can be difficult choosing between the thousands of different stocks, bonds, and mutual funds that are out there. It is important to make sure that you choose the right investments to grow your wealth over time.
While you could try to do all of this by yourself, the average person does not know enough about it to do it right. By hiring a financial advisor, you can increase the chances of getting it done correctly.