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Everyone wants to be wealthy — but what does that even mean? Generally, as we get richer, our definition becomes broader. Still, objectively speaking, we all follow a similar path as we go from “zero to hero,” which can be traced to the eight stages of wealth. We’ll run through what this journey looks like and what to expect at each stage so you can figure out where you are today and understand how to build wealth.

Stages of wealth

Most people don’t go from being broke and living in their childhood bedroom to a millionaire overnight. Unless you win the lottery or happen to meet the right person at the right time, you’ve probably had to build wealth gradually as your career or business and investment portfolio grew.

This journey can be traced to eight stages: Dependency, solvency, stability, accumulation, security, independence, freedom, and abundance.

1. Dependency

Nobody pops out of the womb with multiple established income streams (unless perhaps they’re a Kardashian baby). Ultimately, we all spend the first chunk of our lives being dependent on our parents or guardians.

Typically, this stage lasts until the early twenties, when young adults go out into the world and start making money.

We often transition out of this phase gradually — for instance, someone may be 100% financially dependent as a child, 50% dependent as a college student, and 10% dependent as a young professional who needs to borrow small sums here and there. In fact, half of parents still give financial support to their adult children.

There will also be a few outliers who launch successful careers as teenagers or continue to be dependent in later life.

2. Solvency

It’s practically impossible to go directly from depending on someone else for money to financially thriving. There’s going to be a period when, even if you’re earning a good salary, you haven’t yet built up an economic safety net or the funds for major purchases like a house.

This is known as the stage of solvency because you’re just about able to pay your bills each month without falling into debt, but you’re not able to go far beyond this point.

At this point, it can seem like the journey to financially thrive is a steep mountain, and that one little slip-up could prevent you from reaching the top. Many people remain in this stage for most of their life — 56% of Americans wouldn’t be able to cover a $1,000 emergency expense.

3. Stability

If you stay solvent for long enough, you should eventually make it to stability. At this point, you know that you’ll easily be able to pay your bills each month and you don’t need to worry about the price of everything you buy at the grocery store. In other words, you’re not living paycheck to paycheck.

You’ve also built up enough financial cushioning to mean that one expensive emergency won’t have a big impact on you, and you’ve likely started to think about future milestones, like taking out a mortgage or saving for retirement.

4. Accumulation

Once you’ve achieved stability, you can finally start to accumulate wealth and make some headway toward your plans. This is the point where you open investment accounts and start to get serious about building a portfolio.

The average personal saving rate in the US is just 3.5%, but many experts recommend aiming for at least 20%.

Surprisingly, those on a higher income don’t necessarily manage to put 20% or more aside. High earners may fail to make it past the stability phase if they keep finding more ways to spend their money instead of looking for ways to grow it — so anyone who has resisted this temptation deserves a pat on the back.

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5. Security

If you manage to accumulate enough wealth, you’ll eventually reach a place of security. This is when you’re not just stable enough to know you can afford your bills each month — you’re also secure enough that you could afford to indulge in some luxuries or take a few months off work if you were to fall ill.

However, it’s important to keep on saving and investing so you can see the fruits of your labor. At the security phase, you might be wealthier than the majority of the population, but you’re still reliant on income from your job to cover your expenses.

6. Independence

If you’re prepared to keep grinding in the wake of financial security, you may reach the next stage: Independence. This is a real game-changer because it’s the point when you stop being so reliant on your job for income.

At this point, your investments have risen to the point where they can finance your lifestyle. Financial independence is all about having enough money to afford your possibilities.

You could choose to quit your job and travel continuously or try to start that business of your dreams. In FIRE, financial independence is defined as the point at which you can withdraw 4% of your portfolio’s total value, and the income would be high enough to cover your lifestyle.

However, if you don’t advance beyond this stage, you’ll still have to spend the rest of your life budgeting to ensure you don’t exceed the 4% withdrawal right.

7. Freedom

The stages of independence and freedom might sound the same, but there’s a key distinction. When you’re financially independent, you have the minimum needed to finance your life without having to earn a penny again.

But it doesn’t mean that you have enough to live life to the max, so to speak. Even if you have a portfolio of $1 million and you’ve paid off your mortgage, living off $40,000 a year (4% of $1 million) isn’t exactly living the high life.

To reach this point, you’ll need much more money — likely a net worth of $3 million or more. Only a small fraction of the population will ever reach this stage.

8. Abundance

It’s an incredible achievement to reach the stage of financial freedom. But as they say, it’s easier to make more money when you already have money — and as a result, those who are financially free often manage to continue building wealth. Then, they reach the stage of financial abundance.

This phase is best described as a point where you have more than you could ever spend. There are very few purchases that you need to question — maybe a second house in the Hollywood Hills or a yacht.

Ready to ascend?

Everyone’s journey to wealth is unique to them, but it’s still possible to trace some universal stages of wealth that apply to the vast majority. Wherever you are today, there’s no phase where you can stop thinking about your personal finances altogether — even if you’re at the point of abundance, it’s essential to understand your portfolio.

To make this as easy as possible as your investment strategies become more complex, Vyzer offers a platform where you can sync data from all your accounts and analyze them in one place. Even better, you can try it for free.

Wealth management is often considered a comprehensive service that takes a more holistic view of the client’s financial picture. This includes various things, such as estate planning, financial planning, tax planning, and investment management.

Most people consider it a high-end service. Sometimes, companies require a client to have a minimum net worth or a particular level of investment assets. When customers need those things, it’s often useful to consolidate various financial advice types into one place. It’s more convenient and easy to keep track of things.

Key Objectives for Wealth Management

The objectives for wealth management can vary based on the investor. Every client has different situations and needs, and a good advisor should tailor the advice accordingly. Here are some of the most common goals for customers:

What’s Wealth Management?

It’s time to dive in deeper into what wealth management truly means. Overall, it’s a holistic service that helps high- and mid-net-worth clients manage liability exposure, grow their wealth, and devise ways to pass that money onto designated heirs upon death.

Typically, these services use a comprehensive approach to look into the financial situation of clients with a high net worth. Instead of using a financial advisor who focuses on planning and investment management, there are many other features available.

Here are some of the typical services provided:

In some cases, the services are broken up and delivered by outside partners. For example, legal services are often handled by an attorney or lawyer associated with the wealth management firm.

How Big a Net Worth Do You Need for Such Services?

Usually, there are no specific rules in place to determine how much money an investor needs to seek out wealth management services. Typically, individual wealth managers and companies have minimums in place for investable assets, net worth, and other metrics. It’s important to seek out this information when choosing your firm.

In most cases, companies require a minimum of about $2 million to $5 million in assets. Generally, it makes sense to use wealth management firm services for those amounts of money. Anything below that could be hard to justify the expense of using the company.

Just remember that the minimum levels vary by the firm and can change based on your circumstances. For instance, the wealth manager might want to take on the child of a larger client to ensure that the wealth inherited stays with the company.

Likewise, they may wish to establish a solid relationship with young professionals, including attorneys and doctors, to retain that business when they earn higher incomes.

How to Choose an Excellent Wealth Manager

When selecting a wealth manager, you should look at many things:

Does the firm work with similar clients as you? Some wealth managers focus solely on certain customer types. If your situation doesn’t really fit in with that, then the company might not be a good option.

Check the manager’s qualifications, too. Here are some criteria to consider when choosing your wealth manager:

What’s a Wealth Manager Do?

Traditionally, wealth managers offer financial advice so that clients can protect and grow their wealth. However, it goes above just offering tips on investments and designing a financial plan. That’s why they typically work with people of a higher net worth and partner with other professionals, such as attorneys and accountants.

How Do Wealth Managers Get Paid?

Wealth managers are paid in many ways. The most common compensation methods include:

Differences Between Portfolio Managers, Wealth Managers, and Financial Advisors

The wealth manager offers a holistic and comprehensive view on various financial areas, such as philanthropy, legal/estate planning, retirement planning, investments, and tax/accounting needs.

Alternatively, the portfolio manager focuses more on investment management and doesn’t provide advice or services beyond that. They will deal with cash management, tax-loss harvesting, portfolio management, and investment selections.

Then, you have a financial advisor who offers many services, such as investments, tax planning, basic retirement plans, and financial plans.

Wealth Management Strategies

Typically, wealth management strategies vary based on the client’s needs. The reason you use such a firm is to find ways to maintain your wealth and grow it. That means different things to everyone.

Generally, it entails coordinating the moving parts of your financial situation into a comprehensive plan. This can include investments, taxes, and retirement. Here are a few examples of strategies available:

Alternatives to Traditional Wealth Management

Historically, wealth managers have played an essential role in helping high-net-worth individuals to look after their net worth. While they still have their place for those who prefer one-to-one communication, the digital age has presented us with far more options.

Investors can now turn to digital wealth management software instead, making it easier to take a DIY approach — and avoid the costs of a wealth manager, making wealth management more accessible to everyone.

These programs allow you to connect your investments across different places so you can view your entire portfolio from one dashboard. That way, tracking your performance, reviewing your strategies, and rebalancing your assets where necessary is easier. Plus, you’ll be able to retain greater control over your investment decisions, making this a more attractive approach for experienced investors who can execute their own strategies with the right tools.

On Vyzer, we allow you to add diverse investment types, from real estate syndications to brokerage accounts — and we also provide tools that make managing and controlling your portfolio easier. For instance, our Cashflow Projection feature uses AI to predict how your investments will perform under different scenarios, and we also provide you insights relevant to your portfolio.

Conclusion

Do you think you require wealth management services? They can be highly beneficial for those with a high net worth who want to take a hands-off approach or to feel a personal touch. However, if you’d prefer to keep your costs at a minimum and retain more control over your portfolio, this is more viable than ever thanks to the emergence of digital portfolio trackers.

That’s where Vyzer comes in. Our wealth management platform is the perfect solution for managing your portfolio efficiently and effectively. Try it for free!

Failing to optimize your investments for taxes can eat into your returns considerably. But if there was a single, universally applicable rule on whether to choose a taxable and tax-advantaged investment account, there wouldn’t be any need for two account types to exist in the first place. Instead, they both have their perks and drawbacks, and you’ll need to make a choice based on your circumstances.

Fortunately, we’re here to help you break everything down. We’ll run through the key differences between each account, the types of investments each one is suited to, and other key considerations.

Taxable vs. tax-advantaged investment accounts: The basics

First of all, let’s quickly define exactly what we’re talking about here. How do taxable and tax-advantaged accounts work, and which accounts fall into these categories?

Taxable accounts

A taxable account is simply an account that doesn’t protect your money from the taxman. Account types in this category include checking accounts, saving accounts, and brokerage accounts.

At first glance, it might seem like an account that taxes your money isn’t worth your while, but they offer a lot of flexibility. Unlike tax-efficient alternatives, there are no penalties or restrictions regarding your withdrawals.

Plus, if you plan to invest over the long term, even taxable accounts offer some tax benefits. Namely, investing for a year or more means you’ll have to pay the long-term capital gains rate on your investments (between 0% and 20%) rather than short-term capital gains tax, which faces the same tax rate as the rest of your income. You’ll also have the option to defer your taxes to a different fiscal year when you sell.

This means that your tax burden may not turn out to be as high as you expected, as long as you’re smart with how you proceed.

Tax-advantaged accounts

Tax-advantaged accounts help you optimize your investments for taxes. There are two main types: Tax-deferred accounts and tax-exempt accounts.

When you have a tax-deferred account, you’ll be able to use your investments as a tax deduction immediately, meaning you’ll have a larger sum of money that can grow over time. Most people expect to receive a pension income lower than their current salary, so it makes sense to do things this way. Examples include traditional IRAs, 401(k)s, and 403(b)s.

Meanwhile, tax-exempt accounts don’t give you any tax break upfront — so you’ll have to contribute to them using your after-tax dollars — but you won’t have to pay any taxes when you make withdrawals. Considering that you may face more tax later on when your investments are worth more, this can make sense. It can also help business owners who’ve sold their company and want to create a transition plan for their finances. Roth IRAs, Roth 401(k)s, and 403(b)s are all examples, as are 529 plans.

Some also may turn to alternative investment strategies like private placement life insurance (PPLI) and private placement variable annuities (PPVA), which allow you to reduce taxes using insurance premiums. However, they’re a very specific investment type best suited to particular scenarios and those with multi-million-dollar net worth.

Then there are charitable remainder Unitrusts (CRUT) and charitable remainder annuity trusts (CAT). These are tax-exempt trusts that pay you an income and then give the funds to a beneficiary after you pass away. They can be a useful way to reduce taxes while giving back to the world, but since you’ll lose control of the assets as soon as the trust is created, they’re a niche choice that not everyone would opt for.

Should you choose taxable or tax-advantaged accounts?

We’ve explained the differences between taxable and tax-advantaged accounts, and given you examples of the most popular choices. But there’s still one important question left: Which should you choose?

That’s going to come down to a few crucial factors.

The tax efficiency of your investment

You’re probably all too aware of capital gains tax, but some investments trigger it more than others. On one end of the spectrum, we have actively managed funds, which involve asset managers frequently buying and selling securities — triggering more capital gains and the corresponding taxes. Using the same logic, it makes sense that ETFs trigger less capital gains tax because nobody is actively managing them.

Bonds also tend to be tax-efficient since most types aren’t taxable at either the federal, state or local level (or all three). However, the exception is corporate bonds, which don’t have any tax benefits.

If you’re interested in investing in tax-efficient assets like these, it’s less important to put your money in a tax-advantaged investment account.

The liquidity you need

Taxable accounts are much more liquid. Unlike tax-advantaged accounts, they don’t involve any withdrawal penalties for taking out money, which is perfect if you think you may need to use the money to cover emergencies (like medical bills) or future purchases (like buying a new car).

Overall, tax-advantaged investment accounts are a great option for long-term savings such as retirement or your children’s’ education. However, if there’s a chance you may need to withdraw money sooner, taxable accounts can be a smarter choice — especially if you can opt for something tax-efficient, such as bonds.

How much you’re saving

You can save a lot more money in a taxable account since they don’t have any contribution limits, unlike tax-advantaged investment accounts. As of 2022, you can invest up to $6,000 per year into a traditional or Roth IRA and $20,500 into a traditional or Roth 401(k) or 403(b) — and a little more if you’re 50 or older.

For many individuals, it makes sense to max out tax-advantaged accounts, then move onto taxable accounts for any cash they have left over. However, some people may choose to prioritize taxable accounts for other reasons.

How much flexibility do you need

Taxable accounts offer greater flexibility when it comes to withdrawals. Not only can you withdraw money without a penalty, but you can choose to leave the money in if you prefer. In contrast, if you have a tax-advantaged account, you’ll have to withdraw required minimum distributions (RMDs) once you reach a certain age. Note that this rule doesn’t apply to Roth IRAs.

What do you want to invest in

With a Roth IRA, you are generally limited to investing in conventional assets like stocks, bonds, and mutual funds. However, some specialist providers have emerged to enable crypto investments (such as BitIRA), and a self-directed IRA gives you access to more investment types, including real estate syndications.

Still, a brokerage account comes with greater flexibility and allows you to invest in almost anything without having to go through the steps involved in setting up an SDIRA. Not only will you be able to invest in assets like real estate investment trusts (REITs), commodities, and hedge funds, but you can also trade with margins, which isn’t legally allowed in an IRA.

This is great for achieving diversification.

What will it be?

Few would dispute the advantages of tax-efficient accounts, and they’ll ultimately play a role in the strategies of most investors. But don’t underestimate the advantages of taxable accounts, such as greater liquidity, the ability to save more money, more investment options, and improved flexibility. Depending on the timeframe you plan on investing over and how you plan on accessing the money in later life, they’re an option worth considering.

In conclusion, both types have their drawbacks and benefits, many investors end up with multiple accounts across different brokers and providers. If you find that this makes it harder for you to keep track of everything, consider a portfolio tracker like Vyzer. Vyzer can sync to all your accounts, including more unusual investments and accounts such as private equity or real estate syndications, making it a natural choice for experienced investors with more complex portfolios.

While the stock market is a tried-and-tested method for growing your wealth, it can also be incredibly volatile — as the period between 2020-22 has shown. If you’re looking for an alternative way to invest, you may have wondered if you can use your retirement funds for real estate syndication deals instead. The short answer is “yes,” but it’s a little more complex than buying stocks.

We’ll run through how self-directed IRAs work, before moving on to how to invest in real estate syndications and some key considerations.

Using a self-directed IRA

The importance of using a tax-efficient vehicle like an IRA to prepare for retirement is nothing new. But if you really want to be in control of what your money does, a traditional IRA may not cut it. To invest in alternative investments like real estate, you’ll need to turn your attention to a self-directed retirement account (SDIRA), which allows you to hold assets that a standard IRA restricts.

It’s the perfect choice for many savvy investors. But is it right for you?

Pros and cons

If you’re still on the fence, it might help to look at the biggest benefits and drawbacks.

The biggest advantage of an SDIRA is the option to invest in alternative investments — including real estate, private businesses, and even cryptocurrencies — while still accessing the tax efficiency of an IRA. These asset types often yield higher returns than you’d achieve through assets like stocks and bonds, and give you the chance to create a more diversified portfolio.

You can also leverage property in a way that isn’t possible for other investment types.

Besides, this isn’t the only way in which an SDIRA offers greater flexibility. You’ll also have the chance to set prices and make changes to a property, giving you greater control over your investment, and you’ll have the option to open an LLC to get more control back from a custodian (more on this later).

However, the SDIRA also comes with a few disadvantages, especially when it comes to taxation. You could face unrelated business income tax (UBIT) if you have investments that involve debt (e.g., a property with a loan), which means you’ll face taxes — and an additional charge if you didn’t set up your SDIRA properly with a tax ID.

You also need to consider that opting for an SDIRA is a riskier path, but don’t let that put you off if you can manage the risks.

Different types of self-directed IRAs

As with standard IRAs, you’ll have the choice between a Roth and a traditional SDIRA. A Roth SDIRA allows you to invest after-tax dollars and save yourself from tax later down the line, while a traditional SDIRA means you invest pre-tax dollars and pay tax when you make withdrawals down the line.

The one you choose purely comes down to personal preferences and when you expect to face the greatest tax bill (now or later on).

Investing in real estate syndications through an SDIRA

Now that we’ve cleared up the basics of how SDIRAs work, we can move on to the key point of the article: How to use them for real estate.

A real estate syndication involves pooling your resources with others, making it possible to access opportunities you couldn’t if you relied on your wealth alone. Most opportunities are restricted to accredited investors, and they tend to center on commercial real estate rather than properties for individuals.

The process of starting investing through an SDIRA differs slightly depending on whether you want to open an account with a brand-new investor or just transfer your funds over. Either way, the first step is finding a custodian to open your SDIRA with (more on this shortly). If it’s a new account, the next stage is simply making your initial investment.

Or, if you’re doing a rollover, you’ll need to fill out paperwork. It can take up to two weeks for a money transfer to take place since the custodians will need to arrange the switch.

Then, you can invest in your real estate syndication of choice.

The role of custodians

Every type of IRA comes with a custodian: A company that is responsible for your accounts and which oversees the regulatory side. A traditional IRA technically comes with a custodian too, but as it will just be a financial institution like Fidelity, you won’t notice their involvement to the same extent.

On the other hand, to open an SDIRA, you must work with a certified custodian who approves your investments and tracks your transactions. They can also help you decide on the right account to open for your circumstances and guide you through the necessary paperwork. Therefore, finding the right custodian is one of the trickiest and most crucial parts of investing in this way.

To choose the right custodian, it’s best to do plenty of research. First, check if they’re licensed by the IRA, and you may also want to check the Better Business Bureau (BBB) database.

Compare a few custodians on their price and past reviews. Also, ask whether the custodian allows syndications (some allow for real estate investments but not syndications), and the type of funding they accept (some only take paper checks). Another factor to look out for is speed since this is often crucial for your transactions if you want to grab an opportunity as soon as it arises.

Another option is to operate under an LLC. This will give more control — a custodian will still need to report things, but you can approve your own transactions.

Take control of your retirement

Preparing for retirement is a non-negotiable, but there’s more than one way to do it. If you’d like to go beyond the usual stock investments, an SDIRA is a perfect way to access alternative investments like real estate syndication while still accessing the tax benefits of an IRA.

If you want the right way to track your alternative investments along the way, consider using a portfolio tracker like Vyzer to stay on top of how your assets are performing and access insights to make any necessary adjustments.

Risk management is part of being human, and it’s certainly not reserved for the financial realm. Let’s look at why risks matter and how to approach them.
Pluck a random person with limited financial knowledge off the street, and we can guarantee they have experience in assessing risks. Marrying your childhood sweetheart even though someone better could come along later? It’s a risk. Playing the field even though it could mean that “the one” gets away? Also a risk. These might sound like strange examples, but they show that we can’t get away from risk management.</p>

At Vyzer, we help investors track their wealth, so we know how important it is for them to balance their risk exposure with their goals. Yet most people don’t realize they’re already managing risks all the time. Let’s take a look at what risk management is (both inside and outside of the context of finance) and how to approach it effectively.

What is risk management?

In a nutshell, risk management is all about figuring out how much uncertainty you’re willing to take on and using that to make decisions. It can be a conscious process that involves identifying and quantifying specific risks, but in many cases, this decision-making happens without us even realizing it.

Risk management: Real-life examples

How many insurance policies do you have (that weren’t a requirement set by the government or a mortgage provider)? The answer to that question tells you plenty about your risk preferences.

What about the career path you followed — did you leave school early, skip college, and start a business? Or did you go to college for a useful subject and climb the ladder gradually? That’s another big indicator of your attitude to risk.

How to make a risk management plan

Lewis Carroll once said that “we only regret the chances we didn’t take” — phrases like this show just how embedded risk management is into our culture. Taking risks is part of life, and the ones we decide to take (or not to take) define who we become.
We need to be a little more conscious about how we approach uncertainty. Making a risk management plan might sound overly rigid and technical, but a lot of it is just an extension of our usual thought patterns.

There are three essential steps to managing risk:

  1. Assess — which specific risks do you face?
  2. Categorize — which risks are the most and least severe?
  3. Educate yourself — what can you do to reduce each risk?

Once you have a clearer idea of what you’re facing, you can apply different strategies to manage each risk. Here are some common approaches:

Risk management in finance

So far, we’ve talked about risk management in a pretty general sense to demonstrate just how relevant it is to our everyday lives. But everything we’ve examined also applies naturally to the financial side of risk management.

Before a fund manager invests in an asset, they need to weigh up the potential risks and returns. Some investors have a risk-loving profile, while others prefer to take a risk-averse approach — this determines how they’ll balance the two factors.

Let’s look at some of the most common types of risks you’ll encounter when investing:

How to manage financial risks

This long list might sound intimidating, but you can use the same basic framework and strategies we’ve outlined already.

There are also some additional strategies you can employ, such as:

Would you risk it for a chocolate biscuit?

Next time you’re carrying out a complicated calculation to figure out if you should invest in NFTs or real estate, remember that you’re doing something humans have done for as long as they’ve existed. And regardless of whether you’re assessing the risk of investing in a particular asset or doing zero preparation for a work presentation, the basic principle is the same.

As we’ve seen, risk management doesn’t have to be as frightening as it sounds — but it can certainly help to involve others in the process. After all, sharing your risks is one of the key ways to mitigate it. At Vyzer, we can help you with risk management by ensuring you stay on top of your portfolio and its allocation, making it easy for you to rebalance when needed.

Why not sign up today and try it for yourself?<?p>

The days are getting longer, the weather is getting warmer, and nature is blooming. It can only mean one thing: Spring is here. For some, that means it’s time to show your backyard some love or get fit for summer — but this season of renewal can also be the perfect time to “spring clean” your investments.

With tax season wrapping up, it’s the perfect time to assess where you’re at with your finances and get them in order. Let’s run through some of the best ways to do exactly that.

1. Reconsider underperformers

If we asked you (or just about anyone) if they’d prefer to invest in a high-performing or under-performing stock, it’s a given that they’d choose the high performer. Yet when it comes to the reality of our own portfolio, we often have an irrational tendency to hold onto assets that aren’t doing well. This is known as the “sunk cost fallacy.”

Maybe it’s because you invested in a private equity fund in good faith and are holding on so you can be proven right eventually. Perhaps you’ve invested in something for so long that it seems too late to let go now.

But the important thing here isn’t to psychoanalyze why you’re choosing to cling to an underperformer in the first place — it’s to change your ways. If you were advising a friend who had your portfolio, would you suggest they sell their worst-performing assets? If so, you should probably do the same for yourself.

Note that when we’re talking about “underperformers,” we’re not just talking about assets that have given us a negative return, but also those that have underperformed relative to the rest of the portfolio (even if they still produced a positive yield).

2. Tie up loose ends

It might not be exciting or glamorous, but getting your paperwork in order is a must. Gather together your documents and statements from financial institutions to ensure everything is in check. Are there any accounts you’ve forgotten you had? Any interest charges or fees you’re paying that could be avoided?

When you’re collecting all this info, you might also find you have your money distributed across more accounts than you realized, suggesting that it’s time to tidy things up by restructuring your finances more logically. Do you really need three accounts if one could achieve the same thing?

3. Diversify your investments

One of the first rules of investing is to keep a diversified portfolio. Spring is a great time to check what you’re invested in and see how many industries it covers. Plus, with inflation and Fed rates soaring, it’s more important than ever to check your portfolio contains assets that will be less affected by these conditions (such as real estate, the classic inflation hedge).

The value of diversification applies not just to your assets themselves but also to your investing strategies. Many investors tend to feel an affinity with a particular investing style, such as trying to pick high-growth companies or opting dividends. But it’s best to take an impartial look at what you’re doing. Maybe it could be time to try a new approach?

4. Rebalance your portfolio

Even if your portfolio was perfectly balanced and diversified when you first created it, time changes everything. In most cases, as some assets yield great results and others underperform, our portfolio can skew in the wrong direction.

For instance, you might have initially invested 5% of your portfolio in real estate to avoid risk exposure. But over time, if a property ended up rising in value by 50% (which isn’t unheard of for high-demand areas over the last few years), you could end up in a situation where real estate makes up 25% of your portfolio instead of 5%.

If this isn’t what you were hoping for initially, it’s best to sell a percentage of the assets that have become skewed and invest that money into safer holdings to rebalance your portfolio. It might be tempting to hang on in the hope of continued growth, but remember — you chose to give these risky assets less precedence for a reason.

5. Optimize for tax

Although your first priority should be checking your investment portfolio is well-structured, gains from investments aren’t the only thing you need to worry about — there are also some serious gains you can have by optimizing your portfolio for taxes.

A major part of this is choosing tax-efficient accounts. Have you maxed out your IRA and pensions? If not, it might be time to reallocate some of your funds.

6. Track your finances

If you don’t have any kind of system, it can be a time-consuming process to carry out all of the above. But there’s one simple step that could make everything else easier: Staying on top of your finances along the way.

For instance, Vyzer offers tools to help investors track their assets. You’ll be able to tick all the boxes outlined above by seeing a breakdown of your investments, how they’re distributed across different asset classes, and visualize what would happen in various different situations (e.g., a crash). This also makes it much easier to review how far your investments will take you in the future.

The sounds of spring are here

If you’ve decided it’s time to spring clean your finances, it can be as simple as tracking what you’ve achieved so far or as complex as undergoing a complete rebalancing. The most important thing is simply to look at where you are right now — and to take some kind of action if you’re not completely happy with the answer.

Consider using Vyzer to help you along this journey. Just connect your accounts, and you’ll be instantly presented with visuals and tools to get your finances in order.