5 Strategies to Increase Your Wealth and Double Your Income in 2024

You don’t have to make significant lifestyle adjustments, like renting out your house to roommates, or make riskier investments like bitcoin or options, in order to double your income. It also won’t occur right away. It is actually best to proceed cautiously.

1. Purchase a Home

Purchasing a home is the best way to double your money.

Before the epidemic and its massive effects on the property market, annual increases in home values were between 3% and 5%. That is a sizable profit for a high-quality investment that contributes significantly to the net worth of the majority of homeowners and offers a plethora of other financial and personal advantages.

Although real estate is a long-term investment, you can start seeing returns sooner if you use the suggested approach:

• Have a down payment of at least 20% saved. Although a 20% down payment will spare you from paying mortgage insurance and give you instant equity that could keep you afloat in the event that home prices drop, you can still purchase a home with as little as 5% down.
• Obtain a fixed-rate mortgage for 15 years. Compared to a 30-year loan, your payments will be greater, but you’ll save a ton of money on interest and accelerate the growth of your equity.
• Make a spending plan. No more than 25% of your salary should go toward mortgage payments. Less than what mortgage lenders demand, that is. Affordable mortgage payments, however, will assist prevent you from going into foreclosure if you lose your job or incur a significant unforeseen expense. The more you can save and invest, even in the absence of a financial need, the smaller your payment.

2. Purchase an Exchange-Traded Fund with Dividends

Exchange-traded funds with a dividend theme make investments in stocks that distribute dividends to their owners. You receive income from those dividends on a monthly or quarterly basis, which you can use to either cash out or reinvest in the fund. Reinvesting allows you to benefit from compounding earnings, which means you can acquire additional shares without having to make extra out-of-pocket investments. This makes it a superior strategy to grow your wealth.

Although dividend ETFs are less hazardous than direct dividend stock investments since they contain a variety of firms, which offers some protection by offsetting the impact of underperforming stocks and ensuring that the loss of a single company won’t wipe out the entire fund.

Various funds employ distinct approaches. While some seek out larger dividend yields, others seek out dividend growth that is steady. Even though you would think that shares will increase in value over time, this could only be the secondary objective.

It’s crucial to remember that whether you take a withdrawal or not, you will still be taxed on your profits in the year you receive them. If you’re worried about how your investment can impact your tax situation, get in touch with a tax expert.

3. Take a Different Job or Request a raise

According to a recent ADP Research Institute report, the difference has significantly closed among its clientele, but changing jobs still generally results in higher pay—2.5% more, with job stayers receiving a median 5.1% raise and job changers receiving a median 7.6% increase.

You’ll need to conduct some research to determine which scenario will enhance your income the most, as the median indicates that half of the groups saw higher increases and the other half saw smaller increases. In either instance, if you investigate market salaries to see whether you are currently underpaid and develop a compelling case for increased compensation, you will offer yourself the best opportunity of obtaining the best rise possible.

4. Pay Off Credit Card Debt With Work Bonuses and Tax Refunds

According to a recent TransUnion Credit Industry Insights Report, in the third quarter of 2023, the average credit card balance for each customer was $6,088. According to the Federal Reserve, a consumer making minimum payments of 4% each month ($244) would pay $11,373 over roughly 14 years to pay off the loan at an average interest rate of 22.75%.

In addition to providing a long-term return of almost 100% on your investment, paying off credit card debt with windfall money like bonuses and tax returns also frees up monthly income that you can invest or save for future growth in your wealth.

5. Max Out Your 401(k)

Although you usually can’t take out the money until you are 59 1/2, contributing to your employer’s 401(k) is a great way to increase your income. By deferring a portion of your income, you can make a contribution. You don’t pay tax on your savings until you take money out later, in retirement, because the deferrals are made from pretax income and your money grows tax-deferred.

Up to $23,000 of your income may be contributed in 2024, plus an additional $7,500 in catch-up payments if you are 50 years of age or older.

You may invest the funds you contribute to your 401(k) in any kind of asset that the plan offers. Uninvested funds are kept in cash or cash equivalents, and the investments typically consist of a range of mutual funds.

To ensure that you receive all of the free money you are entitled to, set your personal contributions to at least the match amount if your company matches your 401(k) contributions.

The amount of the match varies depending on the employer. According to Fidelity, a typical formula for these plans is to match the employee’s contribution 50% of the first 2% of their salary after a dollar-for-dollar match on the first 3%. In this instance, the employee must pay a minimum of 5% of their salary in order to receive the entire match.

If you hit your contribution cap early in the year, you may lose out on matching funds since your employer may not match your contributions paycheck to paycheck. In order to ensure that you receive all of the matching funds to which you are eligible, Fidelity advises consulting with your employer.

Although investing your 401(k) assets in anything other than cash carries some risk (cash is not immune to inflation), the risk decreases with time. If you start saving money early enough, you can multiply your savings multiple times.