Basic Strategies to Grow Wealth

Let’s delve into the financial strategies that differentiate the wealthy from the middle class when it comes to acquiring assets.

  1. Mindset Shift:
  2. Income-Producing Assets:
  3. Diversification:
  4. Real Estate Investments:
  5. Tax Planning Strategies:
    • The rich leverage tax-efficient strategies to minimize their tax burden. They understand the tax implications of their investments and structure their holdings accordingly.
    • This includes utilizing tax-advantaged accounts, deductions, and credits to their advantage.
  6. Professional Financial Advice:
    • Wealthy individuals seek guidance from experienced mentors, financially savvy relatives or friends, financial advisors, accountants, and estate planners. They make informed decisions based on expert insights.
    • Other less wealthy classes individuals may lack access to financial advice, which can impact their financial choices.
  7. Retirement Planning:
    • The wealthy prioritize retirement planning early on. They contribute to retirement accounts, build pension funds, and create a safety net for their golden years.
    • Middle-class individuals often delay retirement planning or rely solely on employer-sponsored plans.

In summary, moving from the middle class to a wealthier class involves having a paycheck and a multiple income streams. The key lies in buying income-producing assets first and indulging in luxury items later. It’s a mindset shift that can transform financial outcomes. 

Financial Pyramid

It’s okay to start small, the key is to just start.

MR

Year End Financial Results 2023

At the end of 2021, I called out that 2023 was going to be rough for me, and it was. While most of my friends had market gains of over 25%, I was up only a bit over 15%. For those that might be curious, I had a few financial institution stocks that were hit hard… From a “my portfolio” versus the S&P 500 index, I believe this is actually my worst year ever.

I recapped my losses from 2022, so that now I’m higher then my previous highest account balance set in 2021. So there is that, but from a Secret Wealth Goal, I’m still down 7 percent from the 2021 percentage position..

Thinking about it now, I did experience a certain about of Lifestyle Creep too. Perhaps the trip to Maui should have set off alarm bells in my head, but I justified it as a “one off”. Unfortunately, I have a desire to travel more lately, so I’m suddenly realizing I might have quite a few “One offs” in the future. 🙁

So what is my grade for 2023… B- I’m still in good shape, but I dropped in certain areas. Especially the piece I wrote last year:

“I feel comfortable saying that in 2021 I was about 50% into the upper-middle-class (UMC) level at the end of 2021 in the pyramid below, at least from a net worth perspective.”

This year, I’m a bit less than about 50% into the UMC that I was in 2021. It’s still nice to be in the light green area though, even if it’s just one toe in.

Financial Pyramid

Hopefully in 2024 I’m make up for lost ground, but who knows… Starting the year feeling financially numb…

Thanks,

MR guy

Year End Financial Results 2022

Not much changed from the end of the 2021 post: Year End Financial Results 2021

Mid-summer, I did go to Maui for the first time ever, but after coming back from that vacation (which was great), I got hit with very bad family issues that I’m not going to talk about. In fact, from a net worth perspective, I slipped down quite a bit.

My family issues caused me to become unfocused (totally neglected finances in fact), and my portfolio showed it.

Looks like some rough years ahead…

Year End Financial Results 2021

2021 was a very good year for me, but then 2022 started and it turned sour quickly.

Most of us who have investments and own real estate had an extraordinary year in 2021 because of market gains. Surprisingly, my 401k portfolio blew my individual stocks out of the water in 2021. So my regular brokerage account and Roth IRA just did okay. I’ve been sick lately, so I wasn’t functioning at my peak level.

My Financial Pyramid results

With an increase in pay, investment returns, house value appreciation, and efforts to save money using extreme frugality, mowing my own lawn, selling stuff, killing unnecessary expenses, and working from home full-time, I doubled the yearly gain that I made last year. I’m still driving my 2010 car because the prices of used cars jumped dramatically, and new cars were hard to find, literally, so my lifestyle hardly change this year versus last year.

Grading My Performance

I was shocked when I touched My Secret Wealth Goal! I was in this state only briefly, but it was still an exciting moment. I don’t expect to really hit that goal again for at least 2 or so years (fingers crossed). So given that I hit my wealth goal, I would say that my performance this year was a low A (barely over A-), which is still amazing for me!

Last year I complained about my lack of dabbling in investment strategies, so I bought some crypto and stock options, both of which went poorly for me, but I only “dipped my toe” in these unfamiliar investments, so I only experienced small losses in them.

I feel comfortable saying that in 2021 I was about 50% into the upper-middle-class (UMC) level at the end of 2021 in the pyramid below, at least from a net worth perspective. Sadly, today (4/20/2022) I’m only a third of the way (from the bottom) in that same upper-middle-class tier. I’m only in the UMC tier based on a net worth perspective. I’m from the working or middle class so being in the UMC is new territory for me.

Financial Pyramid

Future Goal Climbing my Financial Pyramid

I’m looking around, seeing what new options I have. I always have grand ambitions around wanting to do amazing things, but something always blocks me. So this time I’m going to let fate take me where she takes me while keeping last year’s thoughts about a middle-class wealth club in the back of my mind.

We’ll see…