The Compound Effect: Building Your Household's Wealth

Wealth is within reach for many people; however, 63 percent of Americans now worry about finances. There is no secret to becoming financially secure: it takes time, sacrifice, and good financial sense. Here are a few ways to build your household's wealth.
 

Let Compound Interest Work for You

Compound interest is your interest-earning interest. While the concept may work against you when you borrow money, it works in your favor when you're saving money. For example, if your savings are growing at a rate of 4 percent, your investment will double in 8 years and quadruple in 16 years.

Tap Into Your Home Appreciation

Home prices appreciate at varied paces and home values vary by market. If you're curious about your home's value, give us a call. Our seasoned professionals are local experts and continually monitor market conditions.

Build Equity in Your Home

One of the most compelling reasons to own a home is it allows you to build wealth over time. The average homeowner has a net worth of $200,000, which is 46 times the net worth of the average renter. Saving for a down payment helps you adopt good financial habits. The more you put down when you buy, the more equity you have when you sell. All though for the first 5 to 7 years the majority of your payment go toward interest, over time, more money will be applied to the principal. You can build equity sooner by choosing a shorter amortization term. While your payment will be higher, you'll often qualify for a lower interest rate and will pay less interest over the life of the loan. Going further, you can multiply the wealth built by homeownership with investment properties.

Pay Down Your Mortgage or Not

Many homeowners grapple with whether to pay down their mortgage or not. The common rule is to pay off higher-interest debt, such as credit card debt, first before paying down mortgage debt. If you decide to payoff your mortgage sooner, here are a few ways to best do so:
 
1. Pay more at the beginning of your amortization period and apply it to your principal.
2. If you receive a tax refund or other windfall, apply it toward your principal.
3. Make 1 extra payment each year and mark it towards the principal. If done every year, a 30-year fixed mortgage can be paid off in as little as 23 years.

Create Financial Goals

Setting a goal will help you achieve your desired level of wealth. Once you reach a goal, set the bar higher.

1. Write Down Your Short Term and Long Term Goals.

Once you determine your goals, write them down. This is the first step towards turning thoughts into action and it will be easy to refer to them later.

2. Create a Budget

A budget not only helps you understand where your saving into your money goes each month and it may also prevent you from overspending. Part of your budget should include investing. Start by investing at least 5% of your income. Review and modify your budget regularly to find places you can cut costs and transfer the savings into your investment accounts.
 
It's never too late to begin building your family's wealth. Whether you are interested in buying a first home or a larger home, we have you covered. Give us a call and we will show you why we have hundreds of delighted clients.

Work With Us

We go above and beyond to talk with you about your wants, needs, fears and whys. We will work tirelessly and share our innermost knowledge of the market and help you achieve all the goals you have set. We firmly believe that if you are not left with an amazing experience, we haven't done our job.

Contact Us