|Spring 2024 Volume 16, Number 2
8 Top Tips from Millionaires for Growing Your Retirement Nest Egg
When it comes to saving and investing for retirement, millionaires tend to do things a bit differently than the average American. With their substantial net worth and investing savvy, they employ unique strategies to continually build their wealth over time. By modeling some of their habits, you can put your retirement savings efforts on the fast track.
1. Research Shows Millionaires Have a Different Financial Mindset
According to a 2022 survey by financial services firm Ameriprise Financial, 60% of millionaires consider themselves upper middle class, while 31% identify as middle class. This demonstrates that today’s millionaires have a much different perception of wealth compared to decades past. Additionally, they tend to be more focused on preserving assets versus increasing income.
Meanwhile, those with under $1 million in the bank were more worried about:
This demonstrates millionaires take a long-term outlook and emphasize securing funds for later years.
2. Embrace a Future-Oriented Focus
Millionaires understand that the key to building wealth means consistently investing over long periods of time. While the average American may make retirement savings a priority only when and if daily expenses have been met, millionaires know that consistent contributions to investment accounts, when compounded, can grow exponentially.
3. Start Investing Early and Stick with It
Arranging automated transfers from your paycheck emulates the millionaire’s discipline of consistent investing. One specialist surveyed recommends committing to investments for at least 10 years to enjoy meaningful gains, as that’s approximately how long it takes for growth to gain momentum and accelerate. While the first decade might be challenging, this time period is also the most important to achieve success.
4. Spread Resources Across Asset Classes
Millionaires also know that diversifying investments across different asset classes helps reduce portfolio risk while allowing continued growth. Rather than putting all their eggs in one basket, they spread capital among:
A properly diversified portfolio performs well when some assets zig while others zag. Having a balanced mix means you won’t see quite as extreme highs, but it also protects you from drastic lows.
5. Leverage Financial Experts
Enlisting guidance from a professional financial advisor allows millionaires to develop specialized investment and retirement strategies. An advisor helps you diversify your holdings, keep focused on long-term goals, and adjust your asset allocation as you get closer to retirement.
6. Spend Less Than You Earn
Building wealth and saving for retirement requires consistently spending less than you earn. By creating a budget and sticking to it, you can identify areas to cut back on so you have more available capital to invest each month.
7. Plan for Sizeable Future Costs
In addition to budgeting for monthly expenses, take a page from millionaires and anticipate high future costs like college, new cars or homes, elder care, and so on. Knowing these are coming down the pike allows you to proactively save for them. By doing so, you won’t risk derailing retirement contributions later when these big expenses arise.
8. Stay Focused on the Big Picture
Having patience and persistence with investing leads to the best outcomes. But life often throws unexpected crises and obstacles at us. Millionaires plan for these contingencies so they don’t panic and pull money from investments at the wrong time when markets are down.
Please call us for help and more information.[return to top]