5 Fastest Ways to Build Wealth for High-Income Professionals

In this episode of the Retire Early Retire Now podcast, hosted by Hunter Kelly, high-income earning professionals are guided through the five fastest ways to build wealth. The strategies covered include automating savings and securing employer matches, investing in equities, increasing income, practicing tax efficiency, and starting a business. The episode aims to assist listeners, primarily in their thirties and forties, who are in the wealth accumulation phase, helping them move towards financial independence or early retirement. Listeners are encouraged to share the podcast with friends and leave a five-star review to help spread financial knowledge.

00:00 Welcome to the Retire Early Retire Now Podcast

00:09 Introduction to Wealth Building Strategies

01:43 Automate Your Savings and Get Your Employer Match

04:27 Invest in Equities for Faster Growth

07:43 Increase Your Income for Greater Wealth

10:04 Maximize Tax Efficiency

11:50 Start a Business for Exponential Growth

14:04 Conclusion and Final Thoughts

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Transcript

0:00

And welcome to the Retire Early Retire Now podcast. I'm your host, hunter Kelly, certified financial planner, and I do this podcast every Tuesday to help high income earning professionals maximize their wealth. And today we'll talk about the five fastest ways to build wealth. I thought this would be a good one. Most of you listening are somewhere in your thirties and forties, and so you guys are still in the accumulation phase and building wealth, and so if we can take some of these strategies, some of these ideas and build wealth faster, well then we can retire earlier or at least become financially independent, give you more freedom to do those things that you want to do in the life that you want to live. We will talk about that today. Some of these topics we have talked about before, but I want to make sure that we're taking care of the basics first. I know we talk about a lot of, in the weeds topics like Roth conversions and what type of brokerage accounts versus retirement accounts and taxes and things of that nature. We wanna keep it really simple today. To make sure that we are doing these five things. And if you find this valuable, if you think a friend, could listen to this, maybe they need help building wealth faster, because they want to retire early and you guys wanna be sitting on the beach drinking my ties in 15, 20 years, whatever that may be for you. this is a good podcast to share. With them. and then if you like it so much to help grow the podcast so more people can listen to it and more people can retire early, go ahead and leave a five star review on your favorite podcasting app. And so how we'll structure this today, we're gonna talk about. the easiest to the more difficult ones. the, also, the other trend here is yes, the easy ones are first, but as they get more difficult, it becomes a faster and faster way to build wealth. Right? the first one we'll just kick off is. Automate and get your match through your employer plan. So automate your savings and get your match through your employer plan. So if you're an employee of a company and they match you 2, 3, 4, 5, 6%, whatever that may be, make sure that you are getting that match, especially if it's a hundred percent of that match or a hundred percent of that contribution. I don't know anywhere, anywhere out in the world where you can get a hundred percent guaranteed rate to return on your money, except for when you contribute to those employer plans that offer a match. it's easy money, or another way to think about it is just an extension of your compensation. My employer's gonna pay me 3, 4, 5, 10,000 extra dollars. For just putting into some, savings or some investing through my 401k. easy way to start building your wealth is to get that match on top of that. Obviously the 401k makes it really easy to automate that savings. You can set a percentage shut a dollar amount, whether that be 2, 3, 4, or 5, 10, 15, 20%, whatever that may be. you can set it and it is payroll deducted. You don't have to think about it. What I wanna think about here is how do we do that outside of our employer plans, right? we need to set automated transfers maybe to our Roth IRA or brokerage accounts, or if we're still working on our emergency fund, creating a savings account and automate those savings there, based off your financial plans. So if that needs to be 50 bucks a month or 5,000 bucks a month, whatever that may be for you, set that up and make it automated so it just becomes another. Part of your monthly expense, maybe you treat it like a bill, so that you don't have to guess and manually put it in there every month and go, ah, do I really need to do this this month? We, we want to do this or wanna do that. It helps keep you on track for those goals and figure out a way to automate those savings. Some people, like myself, may have fluctuating incomes. setting a percentage and just making sure that you do that percentage every month, if you're self-employed, will also help as well. looking at your pn, again, if you own a business, looking at your profit and loss every month and going, okay, well I profit at$10,000, of that$10,000, this is what I need to be saving and then transfer. that percentage into the various accounts that you have. automate your savings is the easiest thing you can do. Getting that match. Also, one of the easiest things you can do and will build your wealth much quicker. Right? versus not getting the match and not saving at all. Right? And so the second thing would be once you get that match, once you start automating those savings, you're ready to start investing. Invest in equities right now. Your risk tolerance and what you're willing to do emotionally and behaviorally, will vary from person to person here. So certainly if you're unsure about how to invest in things of that nature, seek a financial advisor. But, generally speaking, if you want to grow your wealth the fastest. You need to be investing in equities, and you can do that through owning single stocks, right? So equity is just stock, right? we'll talk about a little bit more of that in just a second, but equity is stock. So you can do that through owning the individual stock. You can do that through mutual funds or ETFs, is the most common ways to own that. And so the reason why we want to invest in stocks or equity is because we are taking, or we are participating in the growth of that company, or we may be participating in the dividend that the company pays. If I am owning a company that pays a dividend and I own a share, then they may pay 2 cents per share on, on that stock and things of that nature. And so generally speaking, equity or stock investments have performed the best over long periods of time. So if you think about the other side of investments, fixed income or bonds, that is a more, that is a debt related, investment. if you think about how. Companies run and operate. If they take out debt at, let's say a 3% interest rate or 4% interest rate, and maybe that debt is the bond that you bought, they're not taking that out to pay and break even on that 3% that they're supposed to be paying you, that they're obligated to pay you. they are wanting to get a multiple of that 3%. They wanna get six or seven or eight or 20%. Right? it just makes sense that. Equities would outperform that, right? So you're participating in the ownership of that stock. when you think about investing in stocks, you're hoping that over a long period of time, the valuation, how valuable that company has become is obviously more than the day that you bought it, right? whether that be through revenue, growth, profitability, some sort of specialty in an industry. Whatever that may be. We're investing in those companies. We're having ownership in those companies and hoping that the value will increase over time. And so it has shown over long periods of time. Investing in equity, investing in stocks, has shown to grow wealth the fastest. Now, if you're just starting out, make it stupid simple and invest in. some sort of mutual fund or etf. So you are broadly diversified. You don't have to guess about what stock or bond to buy, things of that nature. Make it easy on yourself. Do some research, get with a financial advisor. those generally make it the easiest. We've talked about target date funds before, things of that nature. But make sure that if you are starting out or you're still. Early on in that accumulation phase that you at least have some equity. again, your risk tolerances may vary, from person to person. So how much risk you wanna take, how much volatility in the portfolio you wanna take. But, it has shown the more that you have, yes, you'll have more volatility, more risk, but you'll have more reward on the other side. the next thing would be number three, fastest way to grow your wealth would be to increase your income. And so we've talked about this, maybe a month or so ago, maybe a little bit longer, but increasing your income. So we're assuming that you're an employee. go ask for a raise, get certifications, get a new degree, whatever that may be. Go do something similar at a different company. Earn more money, right? Especially if you're starting out, getting an extra one or 2% on your, your s and p 500 fund or whatever that may be for you that you're investing in is not going to do as much material change. As increasing your income, 10% or 20%, right? so again, go into your boss, have a list of what you've done for them. What projects have you worked on? How are you managing a team? How are you creating more efficiencies in the business, whatever that may be for you. Right? Say, Hey, these are the things I've done. I think I deserve an X amount of raises, right? Obviously have, have evidence of what you're doing, and if you can go in there and get a, if you're making a hundred thousand dollars or$200,000, you can get a 10% race. Well now that's$20,000, extra or$10,000 extra a year that I'm making, that I can put toward a little bit of lifestyle and saving and building. my wealth faster, right? if you, get a new certification, maybe you can go get a new job or maybe you get that bigger promotion or whatever that may be for you. invest in yourself. Find, a market analysis, right? So go and say, okay, well x, y, Z company, they're paying my position 10% more, 20% more. what do I need to do to get there? Right? all these things that you can do. To increase your income, will materially, give you more cash flow, which will allow you to start to put toward savings and investing in things of that nature, building your income or your wealth faster, right? And so we talk about this a lot, but don't forget, hey, we don't want to have lifestyle creep come up, and. Bite us in the but later, right? if we start getting these high increases, we've gone in, we've asked for raises, we switched jobs, and now we're making 20% more. that doesn't mean we're spending 20% more. That means we are, saving a portion of that just like we would save a portion of our previous income as well. Number four. I'm assuming that, this would be after you start increasing your income, because of tax rates, and that is tax efficiency, right? So doing the things that you need to do to cut down on your tax bill. I sound like a broken record. If you listen to this podcast long enough. Taxes are your biggest bill over your lifetime for the vast majority of us. So doing things to save you,$10,000 here or$20,000 there. Um, and, and those are just random numbers I'm picking, but saving you money over time so that you can keep that money invested or save that money, whatever that may be, will grow your wealth faster. Understand your situation, whether you're a W2 employee and it's just contributing maybe to your retirement plan a little bit differently, whether that be Roth versus pre-tax, or maybe you're a business owner and taking care or taking advantage of. Extra deductions that you get throughout the business and things of that nature, whatever that may be for you. Understand, the tax codes. Get with professionals to maximize, your taxes, not only in that given year, but do tax planning. What do I owe in taxes? If I'm a, if I'm a business owner, I'm making quarterly taxes. What do I owe in taxes every quarter? so they don't get a surprise April 15th of that following year, and now I'm worried about, well, can I actually save and invest this money because it might be, it might be owed to the IRS April 15th of next year. Well, if you start doing tax planning, you understand what your quarterly payment should be each quarter running those projections. Then you can start to say, okay, this is what my cashflow actually is, and now I can save X amount of dollars each quarter, each month, however that works for you. and begin to, to, again, maximize and start to grow your wealth faster. And so lastly, the last way, the fastest way to grow your wealth is to start a business. starting a business easily is the fastest way to potentially grow your wealth. It is not the easiest, it is the hardest, out of all of the five options that I've listed here. If you think about the time and effort that puts into building a business, starting the business, getting new revenue, if you're in sales, getting clients, whatever that may be for you, generating revenue for that business is very time consuming and hard. I. But what investment can you invest in and get a 20 or 30% clip every year? pretty regularly, right? You think about these large mega companies like Walmart, Google, Amazon, apple, Netflix. They're all Walmart, not as much, but these growth type stocks. They are growing at crazy clips, right? Yeah. In the short term, and especially in this year, they've, they've taken a pullback and kind of come back and taken a pullback and it's been very volatile. But if you look over a five year period, a 10 year period, a a 20 year period with some of these companies, they have grown massively, right? if you want to grow your wealth exponentially, starting a business is a way to do it. Now, there's some things that you need to be careful of, like. Putting all your money into your business and then not having good cash flow or having too much money tied into the business, the business slows down. And then now you don't have an income or, any net worth because maybe the business has gone outta business, whatever they may be. you can certainly plan for those things, but all things said, it is the fastest way to grow your wealth. again, you think about, All these people, all these business owners, these billionaires, they didn't get rich off of building a diversified portfolio. They got rich from starting businesses and growing them like crazy. So if you want to grow your wealth exponentially. In the fastest manner possible. Create a good business idea and run with it and build it right. now again, not the easiest thing, easier said than done, but it is the fastest way. And so hopefully these five, ways to build your wealth faster, we helpful again, You know, a friend that would enjoy this podcast episode, go ahead and share it with'em. leave a five star review on your favorite podcasting app. Love growing this podcast. I, I love to see like downloads increasing'cause that means I am helping and educating more people grow their wealth so that they can retire early, become financially independent earlier, because that's what this podcast is all about. So stay tuned for next week. Appreciate you guys listening, and, we will see you in the next one. This podcast is for educational purposes only. It is not meant to be investment or financial planning advice. Please seek a financial professionals when making decisions about your specific situation. Do not make decisions solely based off this podcast, but please keep Palm Valley wealth management in mind when making those considerations.