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We always hear that building wealth is a marathon and not a sprint, but it’s easy to get stuck at the beginning when you’re not sure where to start. Thanks to technology and the internet, there’s almost too much information about personal finance and investing to soak in these days. Not only can you talk with a financial advisor, invest with a robo-advisor or manage your investments entirely on your own, but you can trade individual stocks, invest in index funds or mutual funds or buy fractional shares of companies you believe in.

And then there’s cryptocurrency, non-fungible tokens (NFTs) and a world of digital assets some experts promote as the best way to grow your net worth. All of this begs an important question: What are the best ways to build long-term wealth?

At the end of the day, there are numerous ways to build a solid investment portfolio using stocks, bonds, mutual funds, real estate and more. However, the right strategy for you really depends on how much extra cash you have, your tolerance for risk and when you may need to access your money in the future.

How does investing work?

Investing is the act of buying financial assets with the aim of growing your wealth as a result of those assets appreciating in value, along with paying interest or dividends in some cases. While you can invest through a financial advisor or with the help of a brokerage firm, you can also build your own investment account and invest in alternative options outside of traditional securities.

According to financial advisor Taylor Schulte, host of the “Stay Wealthy Retirement” podcast, one of the biggest factors to consider before you get started is your investment time horizon. “While 10 years might feel like a long time to some people, in the investing world, 10 years is nothing,” says Schulte. “Anything can happen in a single decade.”

Schulte uses the example of January 2000 to December 2009, during which the S&P 500 actually lost 0.95% as a whole. The advisor says that if you have a 10-year investment time horizon, diversification is very important, and it might be hard to go all in on one risky asset class. In turn, this means you’ll likely have to expect lower returns.

Another factor to consider is your tolerance for risk. For example, both the US stock market and Bitcoin are widely referred to as long-term investments, but their risk profiles are very different. Schulte says that knowing how much risk you can stomach without panicking and selling is a very helpful factor in choosing a smart long-term investment.

How to build wealth with long-term investments

Building wealth requires diversification, an appropriate asset allocation and plenty of time. Here are some of the best ways to invest so you build wealth that lasts.

Stock ETFs and mutual funds

Exchange traded funds (ETFs) and mutual funds are funds that are made up of a collection of similar assets, such as stocks, bonds, commodities or other types of assets. ETFs can be bought or sold via a stock exchange, while mutual funds are typically purchased directly from the company that manages the fund.

Brian Bruggeman, who serves as director of financial planning at Baker Boyer, says exposure to the broad stock market over time via ETFs and mutual funds is one of the surest ways to build long-term wealth.

However, when you choose a strategy like this, it’s important to commit to it. Bruggeman says investors are often their own worst enemies, and that becoming comfortable with market ups and downs is essential to staying the course and letting your money compound.

As investors get more comfortable with their investment portfolio, Bruggeman adds, they can start taking more concentrated approaches to strategies that have a rationale for outperforming markets over time. This includes adding in concentrated ETFs and mutual funds that hold a smaller number of stocks with a higher exposure to each.

However, this investing option isn’t for everyone, and it’s definitely not for the faint of heart. “The value and momentum factors have outperformed the broader market over different periods of time, but require a level of conviction to stay invested in the strategy, because there will be times that those strategies underperform the market,” says Bruggeman.

Low-cost index funds

Low-cost index funds help you grow your money by keeping fees to a minimum.

Index funds are typically funds that charge minimal fees and track a benchmark index, such as the S&P 500. Schulte says his favorite long-term investment is a basket of low-cost index funds invested in the global stock market.

He adds that, given current valuations, a basket of low-cost index funds would overweight small-cap value and international index funds, which are signaling higher expected future returns. “I don’t know exactly when those higher returns will show up, which is why these funds are in my long-term investment bucket,” he says.

Financial advisor Jeff Stark, a portfolio manager at MAI Capital Management, says investors who want to build wealth for the long term should consider index mutual funds (or even ETFs) that invest in indexes like the S&P 500 or the S&P 1500. “These can serve as the backbone of your equity portfolio,” he says.

Real estate, or REITs

Schulte also points to real estate as another great long-term investment. But since investing in a primary home typically produces lackluster returns after costs and inflation are factored in, he favors investing in publicly traded real estate investment trusts (REITs) for exposure to this asset class.

REITs contain a collection of income-producing real estate properties, allowing individuals to invest in real estate without actually having to own specific properties. Best of all, REITs let you invest in real estate using a taxable account or your retirement account without any of the hassle and stress that comes with being a landlord.

“REITs provide easy access to income-producing real estate around the globe and, historically, they have provided investors with healthy returns over long periods of time,” says Schulte.

While REITs are offered through any major brokerage firm, you could also try investing in real estate with a platform like Fundrise. This company offers its own private equity REITs with low fees and low account minimums.

Short-term investments to keep your money safe

In addition to long-term investments, there are plenty of short-term investments that can help you keep your money safe while taking advantage of compounding.

Just remember that “get rich quick” schemes are everywhere in the investment world, so it’s vital to conduct due diligence before you invest your hard-earned money. “Consumers should watch out for misleading claims,” says Schulte. “Nobody has a crystal ball, and there’s no such thing as a low-risk, high-return investment.”

Here are some shorter-term investments to consider for your financial portfolio.

Money market funds

Financial advisor Michael Mezheritskiy of Milestone Asset Management Group says individuals who may need their cash within a few years should steer clear of investing those essential funds in the stock market due to its volatility. Instead, he suggests checking out high-yield money market funds.

Money market funds are funds that invest in short-term assets designed to be easily liquidated, and are usually purchased through an investment fund company. “They usually pay a higher rate than cash at the bank and are fully liquid and FDIC-insured,” says Mezheritskiy, referring to the Federal Deposit Insurance Corporation (FDIC), a government agency that insures certain investments.

Online savings accounts

You can often open a savings account online and get a strong interest rate with no maintenance fees.

If you know you’ll need your money in the short term, also look for bank accounts you can open online. Financial advisor Dallin Cutler of EP Wealth Advisors says a high-yield online savings account can help keep your money safe in the short term, although the expected yield in today’s interest rate environment is low. “

Online savings accounts tend to be competitive in the interest they pay because they don’t have the overhead of physical bank locations,” he says. “Also, most online savings are FDIC insured up to $250,000.”

Treasury Bills

Financial planner Maggi Keating of FBB Capital Partners points to Treasury Bills as a solid short-term investment since they’re backed by the US government. “These investments can be purchased in denominations of just $1,000 and have maturities of four, eight, 13, 26 and 52 weeks,” she says. Not only that, but the interest earned on your investment is exempt from state tax.

Certificates of Deposit

Finally, consider Certificates of Deposit (CDs) for your short-term savings, or for savings you may need to access in the coming years. Keating says CDs usually offer a higher rate than a savings account since you’re locking up your funds for a specified period of time from three months to five years.

CDs can typically be purchased from your local bank or, in some cases, an online bank, and are FDIC insured as well, so you don’t have to worry about losing your money.

Building wealth requires time and patience

Building wealth is a lot more than a numbers game; it’s a tournament with yourself that requires consistency and dedication. While there are plenty of ways to build an investment portfolio that stands the test of time, you’ll want to think over your investment time horizon and risk tolerance before you dive in.

But since time is one of the most important factors in building wealth, it’s important to get started as soon as possible. So if you have money that isn’t invested in either a short-term or long-term asset, take some time to consider your options so you can make sure your money is working for you.

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