Most Effective Ways to Invest: High Income Investing Strategies
Are you looking to figure out how to invest your high income? Are you seeking to improve your investment strategy to boost your returns and maximize the most for the money invested in a particular investment?
Great news. You will see for yourself the most effective ways to invest your money and the tactics that generate reasonable to high returns on your money. In this article, I will discuss the following:
-Cash Management System
-Assets/Investments to Target
-Investment Strategies
For a full complete guide to wealth creation then this is a must read:
How to Build Wealth: Complete Guide
Understand the Basics of wealth and the rules that apply.
If you’re a high income earner and also exploring other opportunities to make money then learn how regular people with and without high incomes are becoming millionaires.
Cash Management System
Before choosing what to invest in with your high income lets take just a small step back first to ensure we have a proper cash management system in place so it empowers us to invest.
A cash management system is simply a system a person or organization uses to organize the cash they have coming in and going out of there various accounts whether person and or business.
A video by a well-known finance professional shows how the wealthy manager their money. Below is a visual graphic that provide the way wealthy and successful people organize their money.
Feel free to customize it to whatever your preference is.
The most important thing is that you have a method in place so that when money comes in from working that it is already determined in advance how the money will be disbursed.
An example, after allocation of money that came in lets say 10% of income goes to a real estate fund and at $10K it will be used for a real estate deal.
When money is earned in salary position or business 10% is taken and put into the real estate fund until the $10K has been reached.
Cash management systems don’t have to be complicated but can be an easy as writing them down manually how you will choose to handle it.
You do want to be careful because writing things down may get lost. I recommend google sheets it is a free tool and spreadsheet. This lets us keep up with everything right from the palm of your hands.
Assets/Investments to Target
Choosing what assets to target is usually based on your own personal choice. One high income earner may choose to stay only in paper assets while another focuses only on real estate and a third may have a balance of both.
Before choosing your asset to target examine your risk tolerance to help guide your asset selection. After selecting your target asset it is time to find out how to successful invest in it at a high level of proficiency that yields profitable investment returns.
Make sure your asset your targeting is in direct alignment with your risk tolerance.
If you choose an asset that is not in alignment with your investment risk tolerance ensure this is what you want.
Assets that are good for high income earners will be listed below:
Both Accredited and Non-Accredited Investors
-Paper Assets (Stocks, Bonds, ETFs, etc)
-Real Estate
-Commodities
-Business
Accredited Investors Only
-Hedge Funds
-Startup Companies
-Private Placement Memorandum
Once you decide on your assets the only thing next to do is make a series of steps one by one to be completed leading up to purchasing your assets.
For example, lets says a man who make $100K a year puts $20k aside a year for real estate. His follow up plan would be in this sequence:
- Find a Real Estate Deal
- Analyze Real Estate
- Finance Real Estate
- Set Management System in Place
If you’re trying to uncover how and where to start investing then read this article that answers the how and where to start budgeting and investing.
I will share a case study of people who where high-income earners and channeled their money into investments that had a real big positive impact on their net worth and wealth.
Case Study
A lawyer who worked in the Wall Street Journal name John entered the real estate investment sector with no experience and found success.
Often becoming an investor can make you more money then being a lawyer if done correctly. Lawyers can be capped meaning there is a range or limit they usually don’t exceed in a given year.
When you’re an investor your earning potential is unlimited. When discussing the best investments for high-income earners the answer is income-producing assets. Real estate is one of many to choose from.
John entered real estate and became an entrepreneur because it saves him time. A quote he mentioned showed in a publication that he said the following “I hated being tied to a system in which the only way to make more money was to work more hours or find people to do it for you.”
Wealthy people invest in assets that produce cash flow regardless of whether they are working or not. High income earners should consider real estate or investment groups to grow their wealth.
In an article submitted on a popular medical doctor’s website a person name Chris Kager, MD talks about how medical doctors and other high income professionals should consider participating in venture capital funds or any form of investment funds of their interest.
The purpose is not only for growing wealthier but to be introduced more to other leaders across business sectors.
The whole point is to have a huge network within and outside the area or career your in.
When you only work within your area of working you limit yourself to other opportunities that can help you reach higher heights in your business and personal pursuits.
I don’t believe life is just restricted to a work office or setting.
The benefits of being a high-income earner and involved in venture capital funds outweigh working in your everyday office.
If you consider this be sure you qualify for these groups as they are likely to have conditions and criteria.
Another thing high income earners should focus on is to become a accredited investor.
Once at this point your investment options rises greatly and you now have available investment opportunities that are not made to the public.
Investment Strategies For High Income Earners
The investment strategies for high income earners various depending on the goals of the investor.
A high income earner who is interested in early retirement or a movement called FIRE (Financial Independence Retirement Early) may choose the tactic of saving 70% of their income and invest into dividend stocks and index funds over a decade and then stop working after they reach a set amount of cash say $800K or 1 million dollars.
A high income earner who wants to keep working but have the option to step away from his job at any time with money still being made is likely to invest in high cash flow real estate.
In doing this, the investor can get his passive income higher than his earned income or income from his day job.
Once this is completed he is free to come and go as he pleases. In choosing your investment strategy clearly define it and write it out on paper.
Once you have defined the strategy organize the tools, resources and capital needed to begin.
To learn more about investment strategies or any method to increase your wealth look into the best selling and up and coming books on personal finance. View books here.
Data:
Previously, I’ve mentioned the best investments for high-income earners are income-producing assets.
Examples were real estate and venture capital funds.
There are other investments to see or consider. Data from the U.S. Trust 2018 Insights on Wealth & worth show an asset allocation of the following:
15% Cash
6% Alternatives
4% Other
21% Bonds
55% Stocks
This is a general and basic makeup of investments but I recommend working within and outside of these investments to hedge against stock market declines and other risk.
Ultimately, your plan should encompass paper assets like stocks but more so assets you have more control over like businesses and real estate.
Next Steps:
- Evaluate your financial situation
- Explore & define your invest goals
- Pick a strategy and assets to target
- Make a plan then execute it
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