Budget Musings

This guest post is contributed by Raine Parker, who writes on the topics of online accounting degrees. She welcomes your comments at her email Id: raine.parker6@gmail.com.

Besides saving money, how can you build up enough assets and wealth to take care of yourself and family in the future? Researching different investment opportunities will help you organize your wealth-building plan so that you can get the most profit out of the money you spend now. Below are five key investments and tips that build wealth over the long-term.

• Home and property: For most Americans, buying a home is the most popular way to build wealth and create assets. Paying a mortgage isn’t like paying rent: you’re not just throwing money at the bank so that you have a roof over your head. When you shop around for a property that you plan to resell in a few years, you should look at qualities beyond the house itself: the location, neighborhood, resale prices of the homes on the same street, school district, and other factors that make the home attractive or unattractive. The more updates, maintenance, and renovations you make to the house will also add to your investment’s value.

• 401(k) (RRSP for Canadians): 401(k)s are designed for retirement, not for short-term saving or paying off debt. Ideally, you will always work for an employer who contributes to your 401(k), although the reality is that not all businesses offer these kinds of benefits. There are also ways to pad your 401(k) like depositing your year-end bonus into the account, and adding what you used to pay in social security taxes if you’ve passed the levy rate.

• Non-trendy investments: FORTUNE recommends sticking with non-trendy investments that have proven to be stable even in shaky economic times. Don’t jump on the stock market bandwagon just because a new company has buzz: do your research and invest in stocks that have a solid track record.

• Stocks: Another tip that FORTUNE suggests for building wealth is to “go heavy on stocks.” According to their proposed formula, you should subtract your age from 120 and put that percentage of your budgeted investments in stocks. The logic is that the younger you are and the more time you have to build wealth, the more likely you’re in the position to withstand risks. [Mutual funds, as opposed to individual stocks, are generally the way to go for the average investor]

• Your credit: While not everyone regards credit as something you actively pursue, it does play a role in your investments. Take care while using your credit cards and always make your monthly and, as much as possible, stay out of debt so that you can establish yourself as a responsible candidate for loans and investments.