Watch time: 2 minutes
The amount of products, ideas, and strategies about how to build your wealth can be overwhelming. So put aside the noise for a minute, and consider 3 simple steps to help you build your wealth.
1. Understand your financial situation
First, you’ll want to have a clear picture of your finances. This will help you decide which steps are right for you.
Take the example of a couple with:
- a $500,000 mortgage,
- two leased cars,
- no investments, and
- an unclear picture of their finances.
When starting to save for retirement, someone might suggest they invest all their money in registered retirement savings (RRSPs). But without knowing where they are now, that idea (while it might be right for some) may be wrong for them.
Simply put, you need to know where you’re starting from before deciding what’s right for you.
2. Set your financial goals
Knowing what your goals are will help you reach them.
Take, for example, a family with two kids planning their education goals:
- One child wants to study at home.
- The other child wants to move away to go to medical school.
In both cases, the family needs to save for their kids’ education. But, the cost of their education plans are very different.
Another one of your biggest financial goals may be retirement. With that goal, you’ll need to decide when you’d like to retire. But it’s also important to consider how long you may spend in retirement.
Take, for example, a 65-year-old with $750,000 in retirement savings. Using the conventional rule of taking 4% out of savings per year in retirement, this investor thinks they'll never run out of money. But they need to consider rising inflation, which is an extra 2% each year. So, factoring that in, this person may run out of money by age 92.
Simply put, you need to decide:
- what your goals are,
- when you want to achieve them, and
- how you'll know you’re on track for success
- How much life insurance do you need?
- The hidden costs of early RRSP withdrawals
- How to prepare for your first meeting with an advisor
This article is meant to only provide general information. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.