Tax Advantaged Retirement Accounts

• One of the most common and effective ways to increase net wealth over time is to make use of tax advantaged retirement accounts like 401k plans and individual retirement accounts, or IRAs. The money you save in 401k plans and IRAs is tax deductible, meaning you don't pay any taxes on the money that you save until the time of withdrawal. The funds you contribute to these plans grow tax free in underlying investments like stocks or mutual funds until you take the money out. In addition, your employer might offer a contribution matching on your 401k plan, which means they will contribute some amount of money to your account for each dollar your contribute. Employer matches essentially amount to free money that can increase net worth over time.
  
  

Stocks

• If you commit money to a tax advantaged retirement account or decide to invest money on your own in a taxable account, you must choose the types of investments that you purchase. Stocks, which are equity shares of companies that can go up in value over time, are a common investment to grow net worth. While stocks can fall in value, CNN reports that stocks have historically outperformed other investments over investments over long periods of time, making stock investing a common wealth building strategy for the long-term.
  
  

Diversification

• All investments carry some level of risk. A company could go bankrupt causing its stock to plummet in value or the demand for housing could drop, causing the value of homes to fall. Diversification is an investment strategy involves buying many different investments to reduce the risk associated with any single investment. For instance, if you buy 100 different stocks to diversify your investments, you could still gain wealth value if a couple of the investments don't increase in value in the long-term.
  
  

Eliminate High Interest Debt

• While investments that increase in value result in greater net worth, interest charged on debt obligations saps net worth. If you carry debt with interest rates that exceed the returns you can reasonably expect to achieve by investing, paying down the debt as quickly as possible will optimize net worth. Paying off debt is a risk-free way to improve prospects for growing net worth.