Net Worth vs. Income Differences Explained – PillarWM
Wealthy investors define success in many different ways. Some define it as being wealthy enough to live comfortably. For others, they may want to earn a steady income that also offers them the ability to boost their retirement savings. However, understanding net worth vs. income is vital if you wish to achieve your financial goals. Investors that would like to learn about increasing their net worth should get in touch with Pillar Wealth Management. Our wealth managers are familiar with various wealth-building strategies. You can learn about some of our premier asset management strategies by requesting a free copy of our new book 7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning For Families With Liquid Investable Portfolios Between $5 Million and $500 Million.
STRATEGIES FOR FAMILIES WORTH $5 MILLION TO $500 MILLION
The insights you’ll discover from our published book will help you integrate a variety of wealth management tools with financial planning, providing guidance for your future security alongside complex financial strategies, so your human and financial capital will both flourish.
Clients frequently share with us how the knowledge gained from this book helped provide them tremendous clarity, shattering industry-pitched ideologies, while offering insight and direction in making such important financial decisions.
Table of Contents
Net Worth vs. Income
The terms “net worth” and “income” are standard in the finance world. Each of these holds a distinct meaning, but some may use the words interchangeably. This is because your net worth and income are interrelated. Please talk with our wealth managers to learn how your income impacts your net worth.
If you were wondering, “Is net worth the same as salary” the answer is no. Net worth refers to your total wealth. That is the full value of your assets minus liabilities. Income, on the other hand, refers to the money you receive regularly. One could use the term “income” interchangeably with “salary” depending on the context.
Is Income or Net Worth More Important?
Both income and net worth are essential for wealthy investors. However, you may be wondering, “Is net worth more critical than income?”. Your net worth is an indirect indicator of how much wealth or savings you possess. While income tells you how fast your wealth or savings are potentially growing.
You may be wondering if you should strive for a high income or a high net worth. The answer depends on your financial goals. If you wish to retire comfortably in the future, you should prioritize obtaining a high net worth. However, a high income may also be the key to boosting your savings rapidly.
If you are approaching retirement age fast and possess a much lower net worth than you’d like, you should focus on increasing your income in various ways.
How to Increase Your Income?
As a wealthy investor, there are many different ways to increase your income. This includes:
Focusing on Dividend Stocks
Investors should consider looking into dividend stocks to boost their income. These offer an excellent alternative for individuals that wish to step back but not abandon traditional stocks. Dividend stocks are known to yield above-average income, appreciate over time, and offer protection against certain price declines.
Cutting Back on Investment Expenses
As a wealthy investor, you might already be aware that you need to spend money to make money. However, cutting back on certain investment expenses can help you increase your income. One strategy is to work with a low-cost broker who can offer you the same services but at a lower cost. You should also ensure that your broker doesn’t charge a load fee, as such costs can add up over time.
Reduce Your Trading Transactions
A popular way to reduce your investment expenses is to cut back on trading activities. This doesn’t mean you should stop trading altogether. Instead, it may help if you focused on making only the essential trades. It may help if you created a strict trading strategy and stuck with it if you want to minimize the number of investment transactions you perform.
In addition to the above strategies, you can increase your income by improving your portfolio performance. We discuss many strategies to improve your portfolio performance in our guide.
What Income Do You Need?
As a wealthy investor, you might be wondering, “What is considered a wealthy income?”. There isn’t a set answer for this question. Someone with an average net worth may consider an annual income of $150,000 to be wealthy. A person with a high or an ultra-high net worth may consider a yearly income of $2.5 million to be a rich income.
A better question to ask is, “What income do I need to achieve my target net worth?”. Most investors have some net worth target they wish to achieve. A high income will help you accomplish this net worth faster than a low income. However, you will also need to factor in your costs and expenses. Please talk to our wealth managers if you wish to learn what your target income should be.
A high income won’t lead to high net worth if your expenses are the same or exceed your income. For this reason, investors may need to focus on budgeting if they wish to achieve their dream net worth.
How a Wealth Manager Can Help Increase Your Net Worth
Wealthy investors often turn to different financial professionals for assistance when they help with meeting specific financial goals. One of these professionals is wealth managers.
A wealth manager is a particular type of financial professional that offers a wide variety of services. This includes:
• Asset management
• Portfolio Analysis
• Retirement Planning
• Estate Planning
• Insurance Planning
• Tax Planning
The above services can help you increase your net worth or protect your wealth in various ways.
Wealthy investors can ask a wealth manager to manage their wealth on their behalf. Once you entrust them with your assets, they can perform trading activities for you. You won’t need to worry about managing your investments yourself, as the wealth manager will take care of the bulk of these duties and offer you regular updates on your portfolio performance. You can read up on asset management strategies by requesting a free copy of our book 7 Secrets To High Net Worth Investment Management, Estate, Tax and Financial Planning For Families With Liquid Investable Portfolios Between $5 Million and $500 Million.
If you want to increase your net worth by expanding your portfolio, a wealth manager can help you with picking the right assets. We discuss some great portfolio expansion strategies in our special guide.
A wealth manager can also offer to analyze your portfolio for you. They can identify the various inefficiencies and risks present and help you overcome them. The right wealth manager can help you increase your investment returns and may also suggest strategies to maneuver around risks that could jeopardize your wealth. You can learn how to choose the right advisor by reading our special guide.
Retirement planning services are helpful for investors, no matter how far they may be from retirement. A good retirement plan will help you account for the various risks and concerns you will face during retirement. This also includes budgeting activities to minimize your expenses and rapidly boost your net worth. Please talk with our expert wealth managers to learn about our retirement planning services.
Estate planning is another special service that all investors can benefit from. This refers to the act of planning wealth transfer following your passing. A knowledgeable wealth manager can help you create a suitable will that outlines who you would like to pass your wealth onto and how the responsible party should do it.
If you pass away unexpectedly without a will in place, your wealth will be distributed by the court system. This distribution process can be both time-consuming and expensive, so you should use estate planning services to ensure your children and beneficiaries receive your total wealth amount in a timely manner.
Insurance planning is a vital service that can also help you indirectly protect your wealth. This is especially important if you are attempting to build your net worth steadily.
You never know when your health may be at risk. Emergency surgeries can cost you hundreds of thousands of dollars, if not millions. If you don’t have a suitable type of health insurance coverage, you will need to pay for these medical procedures out-of-pocket. This can leave you with far fewer savings than before and make it more difficult for you to achieve your dream net worth.
A wealth manager can help you find a suitable health insurance plan for keeping yourself and your family covered in case a medical emergency does occur.
Tax planning is a lesser-known service, but it can be immensely beneficial for wealth investors. If you own between $5 million and $500 million in liquid investment assets, you may already be paying some of the highest taxes in the country. However, you may not be aware that there are different techniques to minimize the amount of taxes you legally owe.
Tax planning helps make your portfolio more “tax-efficient.” This can, in turn, help you increase your income from your investments and lead to a higher net worth over time.
Why Choose Pillar Wealth Management?
If you require assistance with increasing your income or net worth, please get in touch with us at Pillar Wealth Management. Investors across the nation choose us as their favorite wealth management firm for a variety of reasons. This includes:
Experience is one of the essential qualities a wealth manager must possess. It is the experience that teaches them about applying their knowledge in the real world.
Our wealth managers have a whopping six decades of industry experience and have helped numerous clients over the years. They have assisted them with achieving their financial goals through times of crisis. They can use the knowledge they have gained to offer you expert services in different financial areas.
As a wealthy investor, you may be too familiar with the hidden charges that other financial advisors charge. At Pillar Wealth Management, we always pride ourselves on offering transparent fees. We charge a fixed annual fee based on your asset value with no hidden charges.
This means you can use our services as frequently as needed without racking up extra fees. After all, we are here to help you increase your income and net worth.
Personalized Advice and Plans
As wealth managers, we are aware that each of our clients has a unique background. Some are wealthy investors with an in-depth understanding of finance, while others are recent millionaires looking to make their foray into the investment world.
For this reason, we strive to offer personalized advice for each of our clients. We can help you understand and execute advanced investment strategies without needing to possess advanced financial knowledge. We can also help manage your assets in a manner that is in line with your investment goals.
Get started with better wealth management practices by choosing Pillar Wealth Management. Please set up a complimentary free meeting to talk with us and take your net worth and income to the next level.
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