You’ve heard all the chestnuts about building wealth: Invest in stocks and bonds, feed cash into your retirement account, live below your means. This isn’t bad advice, but in our opinion, it’s not enough to build wealth in the current climate. If your goal is to work a full-time job (or two) until age 75 and then try to retire… stick to that plan.
If you’d like to enjoy financial freedom while you still have your energy and health in spades, you’ll need the strategies and investing ideas we’ll outline in this post.
Building wealth is about more than just saving money: It’s about setting yourself up for financial stability, enabling you to take more risks, and build even more wealth. But if stocks, bonds, and retirement accounts aren’t enough to get you there, what is?
Let’s go over our top five reliable wealth-building strategies. After reading, you’ll have all the info you need to invest with confidence and grow your personal wealth.
Wealth Building Strategies: Why You Need a Strategy
You know you want to build wealth. You’re planning to start investing… what more of a strategy do you need? The problem is that there are more ways to get wealth building wrong than right. Without a game plan, investing is less of a wealth-building effort and more of a gambling exercise.
On the flip side, if you choose not to invest, that’s worse than a gamble: That’s a guaranteed loss. As we’ve discussed before in our crash-course article on building wealth, a savings account is the riskiest investment of all—an investment guaranteed to depreciate in value over time.
At the core of any great wealth building strategy, you’ll need to adopt a mindset of paying yourself first. Dedicate funds to your investments and commit yourself and your energy to building wealth rather than just focusing on keeping your bank accounts in stasis. The magic of compound interest means that the better investments you can make now, the more you’ll earn in the long term.
Tribevest’s mission is to help people see that wealth building is for everyone—not just those who are already wealthy. Our platform offers people the opportunity to pool capital to access investment classes and opportunities they may not be able to access solo. With that in mind, let’s take a look at our top five most reliable wealth building strategies.
1. Diversify with Alternative Assets
What comes to mind when someone tells you to diversify your investments? If you’re thinking about splitting up your stocks into different industries or risk categories, you’re not alone… but you’re also not doing enough to diversify your portfolio, in our opinion. True diversification requires that you stray away from the stock market and invest a portion of your investable capital into alternative assets.
What are alternative investments? Alternative assets are any assets that aren’t cash, stocks, or bonds. Real estate, collectibles, NFTs, and cryptocurrency all fall under the umbrella of alternative assets. By investing in alternative assets, you’re getting in on one of the biggest secrets of wealthy investors. 81% of millionaires invest heavily in alternative assets like real estate.
Diversifying with alternative investments is a reliable wealth-building strategy for several reasons. Firstly, you are not relying on the health of the stock market for the success (or failure) of your entire wealth-building strategy. Additionally, many alternative assets, like real estate or collectibles, are actually more stable than stocks because of the innate, tangible value of the asset itself.
2. Invest in Cash Flowing Assets
If you’ve spent any time in the wealth-minded community, I’m sure you’ve already heard that to build wealth, you need multiple streams of income. While pursuing multiple income streams may refer to having multiple jobs, another way to create an additional income stream is to invest in a cash-flowing asset.
Related Read: The Best Assets to Buy in Your 20s (And How to Get The Capital)
One example of a cash-flowing asset is an investment property. You can take many different paths concerning investment properties. One option is to turn the property into a long-term rental property. Tenants pay rent monthly to live in your property for months or years at a time. Alternatively, you could list your property on Airbnb or VRBO as a short-term rental property. This option works particularly well if your property is located in a tourist-heavy area.
Another cash-flowing option is to flip properties by performing necessary renovations and upgrades, and then sell them for a profit. If you have the cash to buy a property outright upfront, this option may be particularly attractive.
You may also choose to invest in Real Estate Investment Trusts, or REITs. When you invest in a REIT, you’ll have access to returns on a portion of a portfolio of curated investment properties. Most REITs trade on major stock exchanges and are managed by a third party, so if you’re new to real estate investing, these may be a good option to get your feet wet.
3. Invest with a Group
We mentioned this option briefly in the alternative assets section. Still, it’s such an important piece of many investors’ wealth building strategies that we thought it warranted its own section. Investing as a group holds many advantages for both newer and experienced investors.
The first benefit of investing with a group is that pooling capital with other investors helps you reach asset classes you may not be able to afford on your own. Additionally, you’re able to spread your investable capital out over multiple large-scale investments, spreading your own risk and increasing your chances of building wealth by creating a diversified portfolio.
Group investing also enables you to leverage the expertise or knowledge of others, learning about new asset types or investing avenues you may not have explored otherwise. For example, if you’re an experienced real estate investor but have never waded into the waters of cryptocurrency, investing in a group with a few friends who are experienced crypto investors allows all group members to level up both their wealth and their experience.
You can also build generational wealth by investing as a group. You can invest together with family members to achieve cash flow now and obtain assets that can be passed down to the next generation. Parents can also invest with adult children to pass down both assets and investing know-how through the group investing process.
Investing with a group can feel intimidating, but with the help of Tribevest’s alignment tools, group investing is easy, fun, and rewarding.
4. Become an Angel Investor
Another reliable wealth building strategy is to invest in a startup business you believe in.
Does your friend have a business they’re working to get off the ground? Or perhaps you’ve heard of a fledgling company with a mission that resonates with you. Invest at the ground floor for shares of the new company, helping them grow now so you can all build wealth in the future.
Angel investors receive far higher returns on their investment than stock market investors will when the company goes from private to publicly traded. Angel investors often expect at least a 30% return on their investment, but if you invest in a business that is a smash hit, you could make much more.
Of course, a downside of being an angel investor is that the barrier to entry can be pretty high, capital-wise. If you don’t have the capital to become an angel investor, consider participating in a crowdfunding platform like SeedVest, or pooling capital with friends and family to invest using Tribevest.
5. Invest in Yourself
The last—and perhaps the most important—wealth building strategy we’ll discuss in this post is the importance of investing in yourself. You can interpret this point a few different ways, and all of those interpretations are valid. Let’s cover a few of them.
Firstly, you can invest in your own side-projects and endeavors. Do you have a skill that could earn you another stream of income? Perhaps you enjoy making artwork you could sell on Etsy or a similar site. Maybe you have the skills to freelance write or offer consulting services in addition to your regular employment.
The other way you can invest in yourself is to take the time to invest in your own financial education. Knowledge is the ultimate self-investment. Learn from other wealth-minded people. Join groups and communities of people interested in building wealth and leveling up their financial knowledge and skills. The more you understand about investing and wealth-building, the easier it will be for you to achieve.
How to Succeed with Wealth Building Strategies
Building massive wealth can seem intimidating—or even impossible—at first, but at Tribevest, it’s our mission to show that wealth-building is for everyone. Using these strategies, you’ll be able to diversify your portfolio, and your cash-flowing investments will provide you with additional capital to roll into your next investment opportunity.
If you keep going on that path, it’ll be like rolling a snowball downhill: Your wealth will continue to grow, and it will need less and less help from you to do so!
To lower your risk, level up your investment know-how, and access assets you might not be able to afford on your own consider investing with a Tribe! Tribevest makes group investing easy by providing a platform that will help you build, maintain, and operate your investment group with ease. Get started by registering your Tribe for free today!