Surging stock and home values pushed nearly 2 million people to millionaire status, which marked a 15 percent increase compared to the prior year. Still, middle-class families including mine don’t find themselves with more discretionary spending money. According to a USA Today article, there are now 13.7 millionaires out there. All of the millionaires together had $53 trillion in wealth last year or 14 percent more than the prior year. Experts say stocks are owned by the wealthiest 10 percent of American households. My stock holdings didn’t catapult me into millionaire club, but I have hope for the future. According to a recent Reuter’s article, Wall Street is hoping for a consumer discretionary turnaround. In my own life, I am still holding off on major purchases since the Great Recession. As a consumer, I’m not doing a lot to help the economic recovery. I’m focused on helping my own personal financial situation by remaining frugal. I’d like to have a net worth including my home of one million dollars by the time I reach my 60th birthday in a little less than two decades from now.
Getting better at stock picking
One way I can build wealth is by picking stocks that will go up in value over time. I have started paying closer attention to my own behavior. I haven’t been able to afford a new pocketbook in several years, which is why I won’t invest in companies that make luxury pocketbooks. When I start shopping at certain retailers again, I’ll consider it a good time to invest in those stocks. I’m also paying closer attention to whether a particular stock pays a good dividend since I want to be able to supplement my income with dividends as I grow older.
Protecting my money from a crash
I am keeping 50 percent of my IRA portfolio in a money market fund due to the fact that the bull market seems to be winding down. I know I can’t take all my money out of stocks because I’ll lose out on possible growth. At the same time, I can’t afford to have my retirement account wiped out if there is a stock market crash. I’m worried about the baby boomer effect on stocks as well since the millions of retirees will eventually need to cash in their stocks in order to pay bills.
Staying invested in real estate
I think homeownership is a great way to build wealth over time. Even though my current home is not worth more than I paid, it wasn’t the only house I ever owned. I bought my first home as soon as I could qualify for a mortgage, which happened to be age 30. I think the longer a person is in the “real estate game,” the more likely they are to come out ahead compared to renting. When I look at where I am now, I have to consider the $30,000 in profit from my first home sale. That $30,000 provided the down payment for my current home. If my current home appreciates, I’ll be more likely to become a millionaire on paper. In order to meet my millionaire net worth goal, I need to continue to save for retirement and stay in real estate. In another 18 years, my home will be paid off completely. If it’s worth $300,000, I’ll only need another $700,000 in my retirement account to reach my net worth goal. Never mind that $1 million will probably feel like $100,000 by that time. When I give my son a $20, I have to remind myself that it’s like my parents handing me a $5 bill back in the ’80s.
More from this contributor:
I Borrow From Myself Before Tapping Home Equity
Frankly, I Don’t Care About Retirement
First Person: I Got Caught Up in the Gold Buying Frenzy, and It Cost Me