You may have decided that one of your financial goals this year is to build your wealth. But how can you do that?
The good news is you have some options to choose from that can help you make extra money or boost your bank account.
So how are you going to build wealth? Here are some ideas from a CNBC survey covering ways Americans plan to increase their finances this year.
In recent years, the employment market has seen a trend called the Great Resignation as more Americans either quit their jobs and retired or left their current positions for new jobs.
The U.S. unemployment rate has been hovering at a low level for several years, which could be good news for you. Employers need workers and may be willing to pay more in order to secure you as a new employee. So consider shopping around to see if there are jobs for you that will increase your income.
You also may want to consider working from home or finding a position that will allow you to live in a lower cost-of-living area to save some extra cash on everyday expenses.
Start your own business
There was an increase in monthly business applications in recent years, so you wouldn’t be alone if you decided to start your own business as a way to build your wealth. But be sure you consider the costs and potential revenue you can earn before you jump in. Creating a thorough business plan may be key to making your business a success.
Invest in bonds or CDs
Bonds and certificates of deposit, or CDs, may be good options if you want a low-risk investment that may not expose you too much to the whims of the stock market. This option could be particularly attractive if you’re concerned about the potential for a recession this year.
If you’re considering investing in bonds or CDs, check with local banks, financial institutions, or online offers to see what options you may have. The rate of interest paid on a CD varies with the term. For example, a six-month CD will probably pay less than a five-year CD.
Before you invest, consider how liquid you want your assets to be. If you may need access to your money due to a job loss or other emergency, a CD or bond may not be a good choice. A CD has a penalty if you withdraw the money before the end of the term. For easy access to your money, choose a savings or money market account.
Invest in real estate
Housing prices are starting to go down after peaking last year, according to real estate website Redfin. That change could be good for you if you want to invest in real estate. There could be different potential money-making opportunities, such as rental properties for residential use, or you could work with commercial real estate.
Pro tip: Before you jump in, it’s a good idea to learn how to invest in real estate to avoid any kind of mistakes that could cost you big bucks if you don’t invest properly.
Negotiate a higher salary
Don’t want to leave your job? Then it may be time for you to negotiate a higher salary. After seeing a decline in average hourly wages in June, hourly wages for employees are creeping back up, according to the U.S. Bureau of Labor Statistics.
Rising wages could be a sign that it’s time for you to renegotiate your own salary. Remember to do some research before you go in so you know what the market rate is for your position. And be ready to get a new job elsewhere if you can’t get what you’re worth.
Get a second job or side hustle
If starting a new full-time business seems a little daunting, you may want to consider a side hustle and try out your plan before you jump into it as a full-time business.
A side hustle can be easy to establish if you have free time on nights and weekends so it doesn’t interfere with your regular job. It can also help you make some extra cash to save for an emergency fund, debt repayment, or retirement investments.
Invest in the stock market
The stock market can be a volatile place to invest your money, yet in the CNBC survey investing in the stock market was the No. 1 way Americans try to build wealth. Compared with safer options like CDs or a side hustle, investing in the stock market can also be rewarding if you pick the right stocks. You can also put money into mutual funds that may not fluctuate as much as the stock of an individual company.
Before you begin investing, do your due diligence and choose the best brokerage accounts for your particular needs. Remember that there are different types of brokers — from robo-advisors to full-service brokers — so it’s important to determine which type best suits your investment plans.
Are you ready to build your wealth? If you think investing in the stock market is the way to go, be sure you take time to research a brokerage and companies you may want to invest in. You can't afford not to, especially if you're making enough money every month to do so.
Choosing any of the other popular ways Americans try to build wealth will also require research and hard work. But if your goal is to become wealthy, you may have to rely on more than one option from this list.
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