Building a wealth portfolio takes more than wishful thinking — it involves determination and planning. Here are 10 suggestions from experienced money managers to grow your wealth in 2025.
1. Create a Realistic Budget — and Stick to It
Most people keep track of large monthly expenses, such as mortgage and car payments. But are you also tracking smaller daily purchases, including today’s $4.75 latte? And are you regularly reviewing your spending habits? Systematically knowing your net income as compared to your expenses (fixed and variable), savings, and investment contributions helps you analyze how well you are doing with your spending and what needs to be tweaked.
“A well-structured budget promotes discipline and helps maintain focus on long-term financial goals, ultimately contributing to wealth accumulation,” says David Kassir, managing director of Manna Wealth Management in Tysons.
2. Build an Emergency Fund
A layoff, a car repair, unexpected medical bills. Emergencies happen when you least expect them. Twenty-seven percent of people have no emergency savings, according to financial services company Bankrate, and 6 in 10 don’t feel comfortable that the amount they have saved is enough.
Wealth managers suggest saving enough to cover three to six months of expenses for emergencies. If you don’t have money set aside, the Consumer Financial Protection Bureau recommends establishing a savings goal and making automatic recurring transfers to your emergency fund. “A strong cash reserve helps you avoid liquidating investments during emergencies and protects your wealth-building strategies,” says Gordon J. Bernhardt, wealth manager and principal of Modera Wealth Management in McLean.
3. Avoid Unnecessary Debt
It’s just easier to charge it. It’s on sale. I’m upset and buying this makes me happy.
If any of these thoughts seems familiar, you could be an overspender. Overspending is sneaky. Convenience seekers, impulse buyers, discount divas, and emotional shoppers all fall prey to it.
“Limit the use of high-interest debt and focus on paying down existing debt balances,” says Bernhardt. “Avoiding unnecessary debt frees up more cash flow for investing, improves financial stability, and reduces interest expenses that can erode wealth over time.”
4. Invest in Retirement Accounts
Start those 401(k)s and IRAs. Contributions to retirement accounts often come with employer matching, which is essentially free money, says Kassir. “Compounding interest allows your investments to grow tax-deferred or tax-free, significantly boosting your long-term savings,” he says.
Making smart investment strategies will pay off as you minimize taxes. Bernhardt’s suggestion: “Use tax-efficient strategies like holding high-growth investment in tax advantaged accounts like Roth IRAs, holding fixed-income investments in tax-deferred investment accounts like IRAs and retirement plans, and holding tax-efficient investments in taxable accounts. Look for opportunities to reduce capital gains through tax-loss harvesting in taxable accounts.”
5. Diversify Your Investment Portfolio
The old adage of not putting all of your eggs in one basket applies here. Diversification is spreading your money over multiple asset classes, such as domestic and foreign stocks, bonds, and short-term investments. While it does not guarantee profits, financial advisers say it mitigates risk. Risks can be systematic, such as inflation, political instability, and interest rates, or specific to industries, economies, and countries.
“A diversified portfolio can withstand market volatility better than a non-diversified one,” Kassir says. “By investing in a mix of assets, you are more likely to achieve steady returns and protect against significant declines in any single investment.”
6. Automate and Increase Contributions
Automating contributions to savings, retirement, and investment plans eliminates the temptation to spend money that should be saved or invested, says Kassir. He says creating that “pay yourself first” mentality fosters a habit where you make your financial future a priority.
As you get raises and reduce your debts, Bernhardt recommends gradually increasing monthly contributions. “Increasing contributions adds up significantly over time and helps you accelerate wealth accumulation,” he says.
If you use investment or microsaving apps, like Acorns, rounding up to the next dollar on purchases made with debit and credit cards linked to those investment accounts is another way to increase contributions.
7. Don’t Get Emotional About Stock Market Ups and Downs
Your stomach may churn when you hear about market volatility, and it’s OK to acknowledge your emotions. Do some deep breathing exercises to calm yourself down, but don’t let your emotions decide what’s next. Resist the urge to buy or sell during a surge. It’s normal for the markets to go up and down. Keep what’s happening in perspective and think about your long-term goals. “Behavioral finance teaches us that fear and greed can lead to poor timing and irrational choices,” says Bernhardt.
8. Consider Investing in Real Estate
Investing in real estate is another potential strategy to grow wealth. Kassir says buying real estate acts as a hedge against inflation as property values rise with the cost of living. “Owning property can provide steady cash flow through rental income and potential tax benefits. Additionally, real estate typically appreciates over time, contributing to overall wealth growth,” he says.
For those who don’t want the hassle of a rental property, there are real estate investment trusts. A REIT is a company that owns income-producing real estate, like malls, hotels, and offices. They are bought and sold on exchanges like stocks and pay dividends.
9. Work with a Knowledgeable Pro
An investment adviser can make sure your portfolio grows. There are advisers who earn commissions from third parties and advisers who are fee-based only. Fee-only advisers make their money from a percentage of your assets, an hourly rate, or a flat fee.
Fee-only advisers tend to be fiduciaries. “A fiduciary financial adviser is legally and ethically obligated to act in the best interest of their clients, which sets them apart from other financial advisers who may not hold this same standard of care,” says Kassir. “This distinction is crucial in building trust and ensuring that financial decisions are made with the client’s welfare as the top priority.”
10. Invest in Yourself
This may be the greatest investment you make. You can improve your financial stability by starting a side business, or by providing freelance or contract services, for example.
“Additional income streams can be channeled into savings and investments, helping you reach your financial goals faster,” says Kassir. “Furthermore, entrepreneurial endeavors can lead to valuable skills and networks that benefit your primary career or investment strategies.”
Additionally, Kassir suggests building your personal network. Getting advice from a mentor, Kassir says, can lead to investment partnerships, exclusive opportunities, and valuable advice. “Surrounding yourself with like-minded individuals fosters a positive mindset, encouraging you to pursue your wealth-building goals with vigor,” he says.
Feature image, stock.adobe.com
This story originally ran in our January Issue. For more stories like this, subscribe to Northern Virginia Magazine.
