How to become wealthy and expand net worth!
Your savings is a big part of your financial portfolio. But don’t rely only on your savings as that will be a big mistake.
There are many other factors which are used to determine your net worth!
As an example, we can say, you have to consider your investments, how much debt you have, and many more.
What is net worth?
There are things you own and things you owe! The difference between these two is your net worth!
If you understand what is net worth and how it’s calculated, then you can easily figure out the ways to increase it.
To keep it simple, I will be throwing out one example for you to understand how net worth is calculated!
- Home value: $100,000 / (Amount due on mortgage: $60,000)
- Car value: $20,000 / (Amount due on car loan: $2000)
- Savings account holding: $5000
- Retirement holding till date: $10,000
- Home worth: $100,000 - $60,000 = $40,000
- Car worth: $20,000 - $2000 = $18,000
- Savings: $5000
- Retirement account: $10,000
- Hence net worth of John= $40,000+$18,000+$5000+$10,000= $73,000
3 Easiest ways to increase your net worth:
Even though your salary or income will readily determine your net worth, still there are many other feasible ways to expand your net worth subsequently.
1 Try to lower your debts:
There are many ways you can improve your net worth, and one major gateway is clearing your existing debts.
So, make it a motto to pay down your debts first and then think about increasing your savings and net worth.
You can try debt consolidation to pay off your debts in a way more timely manner than you can usually do!
Again there’s this option called debt settlement. You will be negotiating with your creditors to settle your debts in a lump sum amount. If the settlement goes okay, then you can save a good amount on your debt payments.
Therefore, sleepover and understand your options to pay off debts in a systematic way.
2 Own all of your assets outright:
Your house, your car, any real estates, and whatever else you call your asset, you have to own it completely with full built-in equity.
In the above example of John at the start of the post, you can pretty well see that his due debts are impacting his net worth!
Hence, just taking out a mortgage or a car loan won’t increase your net worth.
3 Try out various investment options:
How to become wealthy, you ask? Wll Investment is the oldest rule of thumb!
There are various options but you need to be smart. The stock market is the ideal place to get good returns on investment.
But I think you should go for mutual funds in the beginning as it is much safer and consistent than the full throttle stock market.
Then you have bonds, debentures, securities, and many more. You can even buy properties and lands as they always show a rise in the value with time.
Endnote: In the rush to increase your net worth, don’t miss out on savings and retirement accounts. They are your most basic and important tools to have a steady growth in your net worth. You might lose money in stock market, but can you lose your debit account?? No way mate. It’s yours.