48 Ameriprise Financial Tips

What Is It and How Can You Create It?

By: Carrie McPherson

In a recent survey from Ameriprise Financial, more than 3 out of four Americans (78%) said they have taken at least one step to build generational wealth But what exact 1 ly constitutes “generational wealth” – and how can you achieve it? The most common answer (44%), according to survey respondents, is wealth in excess of $500,000 that’s passed down to loved ones. Depending on your financial situation, half a million dollars may or may not sound like a lot of money. But one thing is clear: no matter how much you intend to one day bestow upon your family and friends, it helps to have a plan. If you, like the majority of survey respondents (68%), say passing generational wealth onto your heirs is important to you, here are some things to keep in mind:

STRATEGIES FOR GROWING GENERATIONAL WEALTH

Be a strategic saver. Rather than leaving wealth accumulation to chance, strategic savers set goals and work to actively increase their savings. They make regular contributions to savings accounts. Active saving curbs spending and influences earning behavior. They may defer purchases, work longer, pursue higher-paying employment, or make other choices (and sacrifices) to ensure their savings goals are met.

Invest in stocks. Investors who are serious about income growth utilize the stock market. Most experts recommend a buy-and-hold approach to optimize earnings over time. A risk-adjusted, diversified, and balanced portfolio can help investors meet their investment goals.

Invest in real estate. Historically, property values have increased over time, making homeownership a leading method of wealth accumulation. Investors may also diversify their portfolios with Real Estate Investment Trusts (REITS) and other purchases of property.

Pass along financial wisdom. Financial values are another important asset to pass along to heirs. Many families find it beneficial to discuss their financial decisions with their adult children and stepchildren. Clear communication can help establish realistic expectations and avoid surprises and conflicts when it comes time to pass along your assets.

Consider “Giving While Living.” Plans for sharing generational wealth can include giving now rather than waiting to hand down assets after death. Beneficiaries are often adult children but can also include charitable organizations. Giving in the present can satisfy the desire to help now and enable you to see the impact of your generosity. That said, it shouldn’t come at the risk of your financial security, so make sure you have the means necessary before writing a check to your favorite cause.

Building generational wealth is a lifelong process. Along the way, an experienced financial advisor can help you develop a financial plan and set achievable goals aligned to your estate planning needs. Your advisor can work with you and your estate planning attorney to ensure your will facilitates your wishes for sharing generational wealth.

1 – Ameriprise Money and Family study (Money & Family: A new study on generational wealth)

Carrie A. McPherson, CRPS®, CDFA®, ChSNC® is a Financial Advisor and Certified Divorce Financial Analyst with BeaconPoint Wealth Advisors, a financial advisory practice of Ameriprise Financial Services, Inc. in Providence, RI. She specializes in fee based financial planning and asset management strategies and has been in practice for 13 years.

Please contact her at: www.ameripriseadvisors.com/team/beacon-point-wealth-advisors or (401) 824-2557 1 Citizens Plaza Ste 610 Providence, RI 02903

Ameriprise Financial, Inc. and its affiliates do not offer tax or legal advice. Consumers should consult with their tax advisor or attorney regarding their specific situation.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Make Investing Automatic with Dollar- Cost Averaging

By Edward Pontarelli Jr.

Have you ever held off from making an investment because you’re concerned that the timing may not be right? If this fear is preventing you from investing, dollar-cost averaging is an approach that you may want to consider. It has the potential to help you accumulate wealth over time and throughout the market’s highs and lows. Here is an overview of the strategy.

How it works

The concept is simple – you invest a consistent amount of money at regular intervals. You put the money to work in the same investment – a stock, a mutual fund or other type of asset – regardless of the price of the asset. This should continue over an extended period of time.

Investing with such a defined cadence takes market timing out of the picture. If the asset has fallen in price, your periodic investment will allow you to purchase more shares. If the asset rises in price, you’ll purchase fewer shares. If you are committed to your dollar-cost averaging plan, all that matters is maintaining a consistent monthly investment, not the price of the investment you’ve chosen. You may want to periodically increase your monthly contribution amount.

Here’s a brief, practical example of how dollar-cost averaging works. Suppose you commit $200 per month to purchase a mutual fund. In the first month you invest, the share price is $10, resulting in a purchase of 20 shares. In the second month, the price drops to $8, and you purchase 25 shares. In the third month, the value is back to $10, and you again purchase 20 shares. In total, you accumulated 65 shares at an average price of $9.23/share. Yet after three months, your initial $600 investment is worth $650.

While this demonstrates the advantages of dollar-cost averaging during periods of market volatility, keep in mind that the future direction of an investment’s value is difficult to predict. If the share price continues to rise over time, you’ll purchase fewer shares. That means the benefit of the systematic investment approach will be reduced. It’s important to note that dollar-cost averaging does not assure a profit or protect against a loss in declining markets. It is a way to utilize market volatility to your advantage if you invest consistently, hold the investment over the long term and the underlying investment likely increases in value.

You may already be doing it

Dollar-cost averaging may already be part of your investment regimen. If a portion of your paycheck is directed to investments in your workplace retirement plan, you are taking advantage of this strategy by making consistent investments into a specific investment regardless of its value.

Keep in mind the advantages and disadvantages discussed above as you consider whether to use dollar cost averaging. It may also help to consult with a financial advisor to find out more about how this strategy may fit into your financial plan.

Edward Pontarelli Jr, APMA®, CRPC® is a Financial Advisor and Managing Director with BeaconPoint Wealth Advisors a financial advisory practice of Ameriprise Financial Services, Inc. in Providence, RI. He specializes in fee based financial planning and asset management strategies and has been in practice for 20 years.

Please contact him at www.ameripriseadvisors.com/team/beacon-point-wealth-advisors or (401)824-2532 1 Citizens Plaza Ste 610 Providence, RI 02903.

Investment advisory products and services are made available through Ameriprise Financial Services, LLC, a registered investment adviser.

Ameriprise Financial Services, LLC. Member FINRA and SIPC.