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9 Best Wealth Management Strategies to Secure Your Financial Future

Effective wealth management is crucial to securing your financial future. By implementing the right strategies, you can start effective wealth-building and achieve your financial goals. In this article, we'll explore the 9 best wealth management strategies to do this. Let's dive in!

Written by

Jozef Lewitzky

Published on

July 10, 2024

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Effective wealth management is crucial to securing your financial future. By implementing the right strategies, you can start effective wealth-building and achieve your financial goals.

In this article, we'll explore the 9 best wealth management strategies to do this.

Let's dive in!

1. Budget & Expense Tracking

It’s the most common piece of advice for a reason. Making and sticking to a budget lays the groundwork for every other part of financial planning.

It helps you learn to keep track of incoming cash and outgoing expenses, prioritize what you want to spend your money on and keep you accountable to runaway spending habits.

If you’re new to budgeting, here’s how you can start:

Creating a Budget: Start with your monthly income, then break down your monthly expenses to better grasp your general financial situation. Categorize your expenses into needs (housing, food, etc.) and wants (entertainment, hobbies, etc.), keeping track of everything, including money set aside for taxes, retirement, savings, insurance, and paying the bills.
Tracking Expenses: You can use budgeting apps and tools like Mint or Personal Capital to track your expenses and manage your finances. A simple pen and paper or just a spreadsheet on your computer also works fine.

2. Setting Financial Goals

People can be surprisingly irrational regarding saving, investments, and spending.

Short-term thinking can win out over long-term results. On one side, there are people being too impatient and greedy and, on the flip side, there are those who are too risk-averse and unwilling to use tools like loans and investments to their advantage.

The right balance is different for everyone, but setting long-term goals and sticking to the plan is a great way to focus your strategies for wealth management. Here’s how you might get started:

Short-term, Mid-term, and Long-term Goals: Divide your goals into short-term (less than a year), mid-term (1-5 years), and long-term (5+ years) objectives.
Create SMART Goals: One popular metric to define reasonable long-term goals is to make sure they are Specific, Measurable, Achievable, Relevant, and Time-bound. SMART goals are concrete and actionable, making their progress more trackable.
Prioritizing and Aligning Goals with Values: Money is essential, but it isn’t everything. Make sure you’re still getting to live in the meantime and flexible with your money, especially if it’s affecting your loved ones.

3. Tax Planning

tax planning wealth management strategies

It’s never a fun thing to deal with, but efficient tax planning can lead to significant savings over your lifetime. You can both minimize what you pay in taxes and maximize your tax claims for a larger overall refund.

Here are some sample wealth management tax strategies to be aware of:

Maximize Tax-Advantaged Accounts: Use tax-advantaged accounts, such as 401(k), IRA, or Roth IRA, to optimize your savings and reduce tax liabilities.
Capital Gains and Losses Management: Manage your investments to minimize capital gains taxes and offset losses against gains.
Utilizing Tax Deductions and Credits: Maximize available tax deductions and credits.

To avoid mistakes, consider speaking with a strategic tax planning team so they can handle your tax headaches for you.

4. Diversification of Investments

Let’s say there are 3 investments you want to make:

Investing in a stock market portfolio
Investing a house
Investing in bonds and precious metals

Having a diversity of investments like this is usually better for protecting their value overall, and here’s why.

If your only investment is your house and the real estate market in your area crashes, you’ve lost a significant portion of your net worth. The same goes for if the stock market crashes and all your money is in stocks.

But if you have different investments across asset classes, you diversify your risk. It’s particularly good to have assets that don’t tend to move up and down together, as this spreads your risk.

For example, owning two houses in the same neighborhood means that if one loses value, the other will, too. The same goes for two stocks in the same industry—if oil prices fall, most oil companies will likely be affected.

Also, consider your potential risk tolerance. When you’re younger, taking more risks with your money is okay—you have more time to ride out bad years and still come out okay. But if you’re older, you’ll soon need to take money out of your investments to pay for your retirement.

5. Retirement Planning

One of the biggest parts of financial management is retirement planning. The earlier you start, the easier it will be to reach your financial goals with a comfortable nest egg.

Compound Interest is your best friend for retirement and wealth generation in general. The earlier you save money, the more influential the effect of compound interest is. $1000 invested at 5% over 40 years will be $7,358.42; for 30 years, it’s only $4,467.74.
Not Taking Large Losses: As you approach retirement, it becomes increasingly important to avoid taking large losses with your investments. A loss of 50%, for example, means you need to gain 100% from the amount left just to return to your initial amount. That’s why conserving your wealth while making small annual gains is a gold standard of investment strategies.
Understanding Retirement Accounts (401k, IRA, etc.): Utilize tax-advantaged retirement accounts to optimize your savings and reduce your tax liabilities. This can save you considerable amounts over your lifetime.

6. Estate Planning

It’s still crucial to consider your will and estate planning for your family’s inheritance.

Creating a Will and Establishing Trusts: Create a will and establish trusts to ensure your assets are distributed according to your wishes.
Minimizing Estate Taxes and Probate Costs: Plan strategically to reduce estate taxes and probate costs, ensuring more of your wealth is passed to your loved ones.

7. Insurance

One final consideration is how much to put into your different forms of insurance.

Assess Your Insurance Needs: Health, life, and property insurance are all important. Identify the areas where insurance can most help you to mitigate risk and protect your wealth.
Choose the Right Insurance Policies: Generally, packages provide more outsized value the larger the premium you pay, so going for the cheapest package is often a mistake. However, it's best to choose the best risk tolerance for you.
Update Your Coverage: Regularly review and update your insurance coverage as your needs and situation change.

8. Continual Education and Financial Literacy

The world is always changing. Staying reasonably up to date on the latest financial advice is helpful for ensuring that you’re not missing any important changes. But, as long as you have your financial literacy foundation down pat, you should do alright.

Here are three things you can do:

Continuously educate yourself on personal finance and wealth management.
Invest in courses, books, or workshops to make informed decisions.
Consult with a financial advisor when needed.

9. Monitoring and Adjusting Strategies

The final piece to the puzzle? Staying flexible and being willing to modify your plans.

When you’re ready to buy a home, start a family, or change careers, your financial plans can radically change. Regularly reviewing your finances and goals can help ensure they align with your evolving situation.

Big changes can also happen at a larger scale - perhaps a recession has hit, and you’re worried about a potential layoff. Or perhaps one of your kids needs help to get back on their feet.

Whatever the concern, these things can mean adjusting your overall financial strategy.