Swords & Shields, The Offense and Defense of Building Wealth

We are introducing a new concept today:  Swords & Shields!  “Swords” are ways that you bring more income and money in, a good offense.  “Shields” are a symbol of things that defend your money and wealth, a good defense.  You have to use both well to build wealth.  Here are 3 swords and 3 shields that you can use in your battle to build wealth: Three Swords (Offense, bringing in income)

Side Gigs

Turn a side hobby, project or skill into an income stream.  There are many ways to do this these days.  In the year 2018 there even more ways than ever to connect with others that may need your skills or help.  Focus on something you can do or a skill you can deploy that adds value to others.  Perhaps you’re handy around the house, sign up to help people fix things that are broken at their house.  Buy things at garage sales and re-sell online.  Babysitting, Etsy creations, Fiver, Task Rabbit, musical performances, sell art, rent out a bedroom, rent out your car, etc. SEE RELATED: Blogging Income, The MBA That Pays You To Learn

Ask For a Raise

Seems too simple.  I have been amazed in life how often one may receive what they desire by asking for it.  people often undermine their own negotiation posture in life.  This reminds me of a great quote, “life is a lease, negotiate well.”  If you are applying yourself at work and adding value, let your supervisor know what you have brought to the enterprise and ask for a raise.  You might be surprised by the outcome and it does not hurt to ask.

Dividend Stocks

I will admit it will take a lot of individual stock to generate significant income.  A person can buy dividend producing stocks and simply collect the payment each quarter.  Instant income and you did not have to do a thing. I love dividends and the reason is simple. You can literally go onto Robinhood or whatever platform you like right now, buy a share of Abbvie, STOR, “O” Realty Income, etc. and that share of stock will pay you each month or quarter without you doing anything. You do not need to work for these companies, you do not need to sell anything, you don’t need to do anything except watch dollars get placed automatically in your account. Literally a 4 year old could do this and I am not sure why more people don’t do it. Now of course there is risk. Without risk there is no reward. The company could hit a rough patch or go out of business and you could lose your investment. BUT, if a person picks mainly Dividend aristocrats or better (dividend paying companies that have consistently paid for decades) the chances are pretty slim that you will lose your investment. SEE RELATED: 6 Ways To Make Money Work For You  

Three Shields (Defending your assets)

Proper Asset Allocation

The stock market has been booming for many years now.  You may need to be re-balanced into a proper mix of stocks and bonds for your situation.  See a financial professional about the proper asset allocation for your situation. Asset diversification is important because the future of investing is unknown and contains inherent risk. Each year different things happen in the world and in companies that effect the share price of assets. Asset allocation allows a person to sleep at night knowing that if one area of their portfolio takes a major hit, they will have other areas they can rely on. We have developed our own twist on a “sleep at night” or “all weather” portfolio. We keep it simple with accounts through low fee investment companies such as Vanguard, Fidelity, etc. in the following allocations:
  • S&P 500 INDEX FUNDS (30%)
  • BOND FUNDS (30%)
  • REAL ESTATE (15%)
  • CASH (10%)
  • INTERNATIONAL & SMALL CAPS (5-10%)
  • INNOVATION & OPTIONS (15%) “Fun Money Investments”
Our mix is similar to the Ray Dalio All Weather Portfolio asset allocation mix. Ray argues that too many people are locked into a situation where they do well when the market is up and bad when it is down. He says the all weather type portfolios can do well in both environments for the average investor. SEE RELATED: “Sleep at Night” Portfolio Mix

Pay Down Debt

Now while everything is booming is the time to get your debt under control.  When the next inevitable financial tumble comes along you are not left standing when the music stops.Debt, a four letter word or a leveraging tool to the next level?  Well, both and it depends. The wrong kind of debt and the wrong amount can be toxic to our ability to conquer financial freedom.  But, most of us also need some in order to advance our skills, buy property, buy a car, etc.  It is fun to talk about new ways to make money and invest in things, but we sometimes ignore the debt side of the equation.  We may not want to face it because it can feel so overwhelming.  It has also reached a level of national and personal emergency.  The nation faces a debt crisis and there is talk among economists that it will trigger the next recession. Many individuals also face a difficult situation with large amounts of school loans, car loans, consumer debt, etc.  In other words, they face a “Debt Dragon!”  Americans owe a combined $1.48 billion in student loan debt.  American credit card debt continues to climb, reaching $905 billion.  Auto loans total about $1.2 trillion.  The average household carriers approx. $15k in credit card debt, $27k in auto loans and $46k in school loans.  Wow, ticking time bomb!  This would hamper the ability to build wealth and could sink a family if a personal emergency struck.  But, there is hope!

Make a Budget

Make a budget.  Understand what is coming in and what is going out each month.  I bet this would lead to you realizing there are places that you could cut back without even feeling it. I don’t know anyone that loves budgeting, besides some accountant type friends. but I do swear by a simple budgeting exercise that allows me to see where the money is going using broad categories. It allows me to ensure good amounts are going into investments and see areas where we can consider cutting back if possible. And it basically is a list! Keep it simple! In this simple budget we keep mortgage/rent out. The reason is that this fluctuates so much across the country. In some parts of the country a $1,000/month may seem reasonable, but in others an average monthly mortgage and property taxes could easily run $3,500/month and up! SEE RELATED: Our $50K/Year Budget

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