The Ultimate Roadmap to Building Lasting Wealth Over the Next Two Decades
The prospect of building lasting wealth over the next two decades can seem challenging, especially given the ever-changing global economy.
However, accredited investors and high-net individuals have a unique opportunity to take advantage of alternative assets that offer both diversification and appealing returns.
In this blog post, we will explore practical strategies to help you grow your wealth over the next 20 years, with a focus on merchant cash advance investing and other alternative investments.
Let’s get started.
Diversify Your Investment Portfolio with Alternative Assets
We mention this one a lot, but that’s because it is so vitally important. A well-rounded investment strategy hinges on diversification. One way to achieve this is by allocating a portion of your portfolio to alternative assets which can bring the benefit of behaving in ways that are totally different from the stock market.
Alternative assets include anything which isn’t a stock or a bond; real estate, whiskey barrels, and private equity.
We specialize in a type of alternative asset called merchant cash advances (MCAs). MCAs provide short-term financing to businesses in exchange for a share of their future credit card sales.
This type of investment can yield attractive returns, with annualized rates often ranging from mid to high teens and even twenties. Some investors have reported returns as high as 80%.
Example: A study by deBanked, a prominent alternative finance news source, showed that MCA portfolios with proper underwriting and risk management practices have historically generated annual returns between 18% and 38%. By dedicating a portion of your portfolio to MCAs, you can benefit from these high returns while also spreading your risk.
Real Estate Investment
We mentioned real estate above as a type of alt, but it is so prominent that it deserves its own mention.
Real estate has consistently been a popular asset class for building long-term wealth. Investing in both residential and commercial properties allows you to diversify your portfolio and potentially benefit from steady cash flow and capital appreciation.
Example: A study by the National Council of Real Estate Investment Fiduciaries (NCREIF) revealed that the total return for private commercial real estate investments was 8.4% annually from 2000 to 2020. By investing in a mix of residential and commercial properties, you can work towards creating a stable source of passive income while also capitalizing on the long-term growth of the real estate market.
Private Equity and Venture Capital
Private equity and venture capital investments offer the chance to invest in companies with substantial growth potential. Although these investments carry higher risks, the potential returns can be significant, particularly if you can identify and invest in successful startups early on.
This type of investing tends to demand a pretty robust knowledge of markets and isn’t generally suited to a novice investor.
Example: Cambridge Associates found that venture capital investments outperformed public equities by a median of 8.3% per year from 1995 to 2015. By allocating a portion of your portfolio to private equity and venture capital, you can participate in the potential growth of innovative companies and might enjoy sizable returns. Again, PE and VC do tend to be considered on the higher risk end of the spectrum.
Art and Collectibles
Investing in alternatives like art and collectibles can be a unique and enjoyable way to grow your wealth. High-quality pieces can appreciate in value over time, and, as an alt, their value is generally uncorrelated with traditional investments, providing additional diversification to your portfolio. Plus, many investors find pleasure in owning a cask of their favorite whiskey or a baseball card of their childhood hero.
Example: A report by Art Market Research revealed that the Artprice100 Index, which tracks the top 100 artists by auction sales, increased by 3% for blue chip artists throughout 2022. By investing in carefully selected art and collectibles, you might be able to enjoy both the aesthetic pleasure of owning these items and the potential for long-term capital appreciation.
Please note that this is a high-risk option, particularly since the value of art and collectibles is subjective. However, it could be a suitable choice if you’re looking for a more fun and unconventional investment.
Optimizing Your Investment Portfolio with Tax-Deferred and Tax-Free Accounts
Understanding the tax implications of your investments is essential for maximizing your returns, particularly for accredited investors and high-net-worth individuals. It’s not glamorous, but it is vital.
By using tax-deferred and tax-free investment accounts, you can optimize your tax efficiency and grow your wealth more effectively. In this section, we will discuss the benefits of retirement accounts like 401(k)s and IRAs, as well as strategies for optimizing tax efficiency in your investment portfolio.
Tax-Advantaged Retirement Accounts: 401(k)s and IRAs
Retirement accounts, such as 401(k) plans and Individual Retirement Accounts (IRAs), offer significant tax advantages that can help you grow your wealth more effectively. The main types of retirement accounts include:
Traditional 401(k) and IRA: Contributions to these accounts are tax-deductible, meaning that you can lower your taxable income in the year you make the contributions. Earnings in these accounts grow tax-deferred until you withdraw the funds in retirement, at which point they are taxed as ordinary income.
Roth 401(k) and IRA: Contributions to these accounts are made with after-tax dollars, but the earnings grow tax-free. When you withdraw funds in retirement, both the contributions and earnings are tax-free, provided you meet specific requirements.
By using these retirement accounts, you can enjoy the benefits of tax-deferred or tax-free growth, which can significantly impact your long-term investment returns.
Strategies for Optimizing Tax Efficiency in Your Investment Portfolio
Particularly as an accredited investor or high net-worth individual, optimizing tax efficiency in your investment portfolio is crucial for maximizing your wealth-building potential. Here are some strategies to consider:
Maximize Contributions to Tax-Advantaged Accounts: Contribute as much as possible to your 401(k), IRA, or other tax-advantaged accounts each year. This allows you to take full advantage of the tax benefits associated with these accounts and can significantly enhance your long-term investment returns.
Asset Location: Consider holding investments with higher tax implications, such as dividend-paying stocks and taxable bonds, in tax-deferred accounts like traditional 401(k)s or IRAs. Meanwhile, place tax-efficient investments, such as growth stocks and municipal bonds, in taxable accounts. This strategy can help you minimize the overall tax impact on your investment returns.
Tax-Loss Harvesting: Regularly review your taxable investment accounts for any underperforming investments. By strategically selling these investments at a loss, you could offset realized capital gains in other parts of your portfolio and potentially reduce your overall tax liability.
Utilize Tax-Efficient Funds: You might want to consider investing in tax-efficient funds, such as index funds or exchange-traded funds (ETFs), which tend to have lower turnover rates and generate fewer taxable capital gains distributions compared to actively managed funds.
By employing these strategies and leveraging the benefits of tax-deferred and tax-free investment accounts, you can optimize the tax efficiency of your investment portfolio and maximize your wealth-building potential over the long term.
Nurturing a Strong Network and Staying Informed
Learning is key to long-term success in any endeavor, and wealth-building is no exception. To create lasting wealth, it’s a good idea to keep yourself updated on new opportunities and emerging trends. Cultivating a solid network of like-minded investors, advisors, and industry experts can assist you in pinpointing potential investments and staying ahead in the game.
For instance, by attending industry conferences, networking events, and engaging in online forums, you can connect with fellow investors and gain access to valuable insights and information. This not only helps you make well-informed investment decisions but also uncovers opportunities you might not have found otherwise.
Leverage Technology and Specialist Platforms to Maximize Your Investments
In today’s fast-paced and dynamic investment landscape, utilizing technology and investment platforms can be a game-changer for staying informed and making informed decisions.
Platforms like our own at Supervest provide a comprehensive suite of tools and resources, allowing you to monitor the performance of your investments, explore new opportunities, and analyze market trends in real time.
We publish weekly research reports and expert analyses, and we also provide user-friendly dashboards that streamline the investment process.
This helps you stay on top of your portfolio and make data-driven decisions, saving you time and effort while focusing on achieving your long-term financial goals and staying ahead of the curve in an increasingly competitive market.
In addition to using investment platforms like Supervest, there are several other ways that technology can help you build your wealth. Here are some examples that you might like to consider:
Robo-Advisors: Robo-advisors are digital platforms that provide automated, algorithm-driven financial planning services with minimal human intervention. These platforms can help you create a diversified investment portfolio tailored to your risk tolerance and financial goals. Popular robo-advisors include Wealthfront and Vanguard’s Personal Advisor Services.
Financial News and Analysis Platforms: Staying informed about market trends and investment opportunities is crucial for building wealth. Platforms like Bloomberg and Seeking Alpha provides access to real-time financial news, market data, and expert analysis, allowing you to stay ahead of the curve and make informed investment decisions.
We also publish expert analysis and commentary on economic news and investment developments every week on our insights page.
By leveraging these technology-based resources, you can improve your financial knowledge, streamline your investment process, and ultimately make smarter decisions to help grow your wealth over time.
Consider Investing in Sustainable and Impact Investments
Sustainable and impact investments are all about making a positive difference in the world while also earning financial returns – and they’re gaining popularity every day!
When you invest in companies and projects that share your values, you’re not only helping to create a better world, but you could also benefit from the increasing demand for eco-friendly products and services.
It’s a fantastic way to feel good about your investments and potentially grow your wealth at the same time.
For example, a report by the Global Impact Investing Network (GIIN) revealed that between 2015 and 2020, the impact investing market grew at an impressive compound annual growth rate (CAGR) of 27%, reaching a whopping $715 billion in assets under management.
By including sustainable and impact investments in your portfolio, you have the chance to join this rapidly expanding market and potentially enjoy both financial and non-financial rewards.
Regularly Rebalance Your Portfolio and Monitor Risk
This is another unglamorous but vital component of successfully growing your wealth over the next 20 years. Think of it like investment hygiene. As markets evolve and your investments grow, it’s essential to regularly rebalance your portfolio and monitor your exposure to different types of risk.
This process can help you maintain an appropriate level of diversification and ensure that your investments continue to align with your long-term financial goals.
Example: A study by Vanguard found that portfolios that were rebalanced annually had a 90% success rate in maintaining their target asset allocation over a 10-year period, compared to a 33% success rate for portfolios that were not rebalanced.
By consistently rebalancing your portfolio and adjusting your investments as needed, you can maintain a well-diversified and risk-appropriate investment strategy.
Balancing Short-term, Mid-term, and Long-term Assets in Your Portfolio
A well-rounded investment portfolio will likely include a mix of short-term, mid-term, and long-term assets. By diversifying across different time horizons, you can optimize your portfolio for growth, income generation, and capital preservation. In this section, we’ll explore the benefits of including assets from each of these categories in your investment strategy.
Short-term assets, such as cash equivalents and short-term bonds, or our own short-term MCA note, can provide liquidity and stability to your portfolio. These assets are typically less volatile than stocks or other riskier investments, making them ideal for preserving capital and meeting short-term financial goals. For instance, our own short-term note offers an Annualized Yield of 10% over a term of 12 Months.
- Provides a cushion for emergencies or unexpected expenses.
- Can be easily converted to cash without significant loss of value.
- Offers a relatively stable and low-risk return on investment.
Mid-term assets, like intermediate-term bonds or dividend-paying stocks, can bridge the gap between short-term stability and long-term growth. These investments often provide a balance of capital appreciation and income generation, which can help you achieve medium-term financial goals.
We also offer a mid-term MCA 2-year 12% Promissory Note. Our mid-term note offers a target interest rate ~2.5x higher than the 2 Year Treasury Rate*
- Generates income through interest or dividend payments.
- Provides some level of capital appreciation over time.
- Offers a moderate level of risk and return.
Long-term assets, such as growth stocks, real estate, or private equity, have the potential to generate significant capital appreciation over extended periods. These investments often carry higher risks, but the potential returns can be substantial, making them an essential component of a growth-oriented portfolio.
You might be interested in our self-directed MCA model if you are looking to grow your wealth through alternative assets over the long haul, and you enjoy having a high level of control and oversight on your investments.
With this model, you also start earning returns within a week, so whilst you can use the platform as a long-term investment strategy, you can also start reinvesting your returns and building through the power of compounding almost immediately.
- Offers the potential for significant capital appreciation over time.
- Can help you achieve long-term financial goals, such as retirement or wealth accumulation.
- Provides a hedge against inflation and long-term market trends.
Incorporating a mix of short-term, mid-term, and long-term assets in your portfolio can help you create a well-balanced investment strategy that addresses your immediate financial needs, generates steady income, and positions you for long-term growth.
Harnessing the Power of Compounding with MCA Deals
We will finish off with a big one. One of the most powerful concepts in wealth-building is the power of compounding, and MCA (Merchant Cash Advance) deals offer an exceptional opportunity to leverage this potential.
MCA deals provide frequent returns, on a weekly or even daily basis, enabling you to reinvest your earnings immediately. By consistently reinvesting your returns, you can supercharge the compounding effect, accelerating the growth of your investment over time.
This approach not only potentially helps you multiply your wealth more efficiently but also instills confidence in your financial journey, knowing that you’re making the most of every opportunity to grow your investments.
Remember, the key to unlocking the full potential of compounding lies in starting early, staying consistent, and allowing your investments to work their magic.
Building lasting wealth over the next two decades requires a proactive and diversified approach to investing. By incorporating alternative investments such as merchant cash advances, you can potentially achieve higher returns whilst reducing risk. Additionally, staying informed about emerging trends, and regularly rebalancing your portfolio can help you stay ahead of the curve and achieve your long-term financial goals.
The journey to financial prosperity may seem daunting at times, but with the right tools, resources, and strategies in place, you can achieve your financial goals. Remember, the best time to start building your long-term wealth is now.
Take action today, and embrace the opportunities that lie ahead on your path to financial growth and security.
You can get started with MCA investing here.
*Data as of 10/1/2022