Whether you are 25 years old and just starting out or 55 and starting to look ahead to retirement, there’s a good chance you are trying to build your wealth. Here are some tips to help you achieve that goal before it’s too late.

Invest early, invest consistently. Based on historical S&P 500 returns, if you invest $1,000/month beginning at age 25 and continue through age 65, you will retire with $5.5 million (before taxes). If you do the exact same thing but begin investing at age 35, you will retire with $2 million. What a massive difference! The compounding of interest over many years is your best friend in building wealth. Even if you need to start small, it is well worth it.

Earn enough to cover all of your needs. That includes building an emergency fund and saving up for the future. If your job does not pay you enough for this, consider moving jobs or doing some additional work on the side.

Stick to a budget. The one thing that prevents building wealth more than earning too little is spending too much! Figure out your “must haves” (rent, utilities, groceries) you “nice-to-haves” (meals out, a weekend away, CrossFit membership), and your “wants” (3rd pair of skis, trip to Europe, a new car). Balance those with your goal of building wealth.

Keep investment costs low. Investments like mutual funds and ETFs have “expense ratios”, which are the fees paid to the people who run the funds. These expenses can be .05% or less, but they can also be well upwards of 1%. That’s in addition to any fees you may be paying an advisor or an investment platform. Private equity investments have costs too, and they are often 2% or more. The more your investments cost the less your money grows, assuming equal gross investment returns.

At the same time, don’t shoot yourself in the foot by investing poorly in order to save on fees. Some funds, inexpensive as they may be, aren’t good funds, and will cost you performance. As well, the famous DALBAR study’s Quantitative Analysis of Investor Behavior 2021 found that the average equity investor’s returns trail the index by 3.5% annually. In that case, paying a Financial Advisor 1% to improve your returns might make a lot of sense.

Don’t panic. People who sell when the market is down tend to perform poorly. That is actually one of the bigger values that financial advisors can bring—they keep you from making emotional decisions. Over the past 100+ years, the markets have recovered from every downturn and then moved even higher. In fact, market downturns can actually be a great time to buy companies while they are “on sale”, and then ride the next market recovery back up.

Pay down debt. High-interest debt can be a real wealth killer. There is no reliable investment that can pay you more than the 27.9% you may be paying on your credit card debt. If you have high-interest debt, paying it off as quickly as possible can free up cash for future investing. I generally recommend paying off anything costing you more than 7%, with occasional

exceptions. If you have debt with an interest rate below 7%, I becomes more situational whether or not it makes sense to pay down that debt.

Building you wealth is very doable if you follow these steps. It’s best to take a good, thorough look at your finances and your goals when making these sorts of financial decisions.

However you choose to build your wealth, invest smartly and invest well!

Larry Sidney is a Zephyr Cove-based Investment Advisor Representative. Information is found at https://palisadeinvestments.com/ or by calling 775-299-4600 x702. This is not a solicitation to buy or sell securities. Clients may hold positions mentioned in this article. Past performance does not guarantee future results. Consult your financial advisor before purchasing any security.