Trends That Will Make You Rich - Page 2 of 2

Trends That Will Make You Rich

of wealth building. In 2002, the U.S. Census Bureau reported that almost 42% of a person’s net worth comes from the equity in his or her home. That’s why our No.1 Declaration of Financial Empowerment principle: to use homeownership to build wealth is the most important. With housing prices soaring, it’s even more important to purchase a home now. The key is to purchase a home you can afford. If your mortgage payment works out to the same as the rent you are paying, then you should have no trouble making your monthly payments.

Homeowners benefit from their purchase because they are paying themselves first. Each mortgage payment lowers the principal, increasing the home’s equity. Homeowners also benefit from tax breaks on mortgage interest and repairs made to the home.

5 Diversify with Exchange Traded Funds Exchange Traded Funds (and iShares) are actually index funds that trade like individual stocks. ETFs give you exposure to an entire stock or bond portfolio as a single security, providing built-in diversity to your investments and lower overall risk than individual stocks. They carry lower fees than mutual funds, although you do pay a commission fee when you buy. “It is a smart, low-cost way to get exposure to asset classes on your own terms,” says Dale Bryant, portfolio manager of the Bryant Group in New York.

ETFs are available in a variety of asset classes: bonds, international stocks, individual countries, industry sectors, and commodities. Investing through ETFs eliminates the need to become an expert in all of these areas. For example, if you want to invest in gold as a commodity, but don’t understand how it is traded in the commodities market, you can gain exposure to that investment by purchasing an ETF. Such diversification into non equity ETFs would provide a hedge in the event that the U.S. market was to hit hard times.