Seven Essential Steps to Take When Your Savings Reach $100,000
Accumulating $100,000 in personal savings represents a major financial milestone. But crossing this threshold requires shifting gears towards more active investing and planning to continue growing your money. Avoid the temptation to splurge on liabilities. Instead, strategically invest these funds to create lasting wealth. This comprehensive guide covers seven essential actions to take when your savings hit six figures.
1. Safeguard Your Assets with Gold
With savings swelling past $100,000, it’s vital to diversify beyond standard securities like stocks and bonds which often rise and fall together. Gold provides an uncorrelated asset class to balance investment portfolios.
The precious metal has intrinsic value, limited supply, and thousands of years of history as a trusted global store of wealth and hedge against currency devaluation. Inflation erodes the purchasing power of US dollars over time, so hard assets like physical gold provide durable value.
Investors have many options to gain exposure, from buying gold coins and bars to opening a gold IRA rollover account using retirement funds. But whatever your choice, ensure proper insured storage arrangements are in place, either at home in a safe or through a secure vaulting facility.
For example, Richard allocated 10% of his $100,000 savings into purchasing one-ounce American Eagle gold coins, storing them in a private specialized vault to hedge market risks. While gold may fluctuate in value, its non-correlated performance helps mitigate losses when paper assets decline, especially during recessions. In reasonable quantities, gold diversifies savings against economic and geopolitical uncertainties.
2. Plan Now for Medical Costs Medicare Won’t Cover
Your 65th birthday may seem ages away, but proactively planning for healthcare costs in retirement is a savvy financial move. Many savers underestimate how much Medicare leaves uncovered, leaving dangerous gaps that can quickly drain savings without supplemental plans.
Options to help bridge the shortfall include Health Savings Accounts (HSAs), Flexible Spending Accounts (FSAs), Medigap policies and Medicare Advantage plans. Each strategy has pros and cons to evaluate. But the key is starting to save specifically for medical expenses a decade or more before retiring.
Crunching the numbers on your projected premiums, deductibles, co-pays, dental, vision, hearing, and long-term care costs beyond what Medicare covers allows sufficient time to build savings. Create a detailed healthcare budget accounting for all projected expenses in retirement.
For example, Mary allocated 15% of her investment portfolio to healthcare-focused funds upon hitting $100,000 in savings. She also increased her HSA contributions to maximize tax-advantaged growth earmarked for future medical costs.
Getting an early start on funding healthcare costs beyond Medicare’s coverage gives you vital financial peace of mind in retirement. The years fly by faster than you think, so plan ahead.
3. Unlock Real Estate Investment Opportunities with as Little as $10
Real estate traditionally required large down payments and strong credit to start investing. But new crowdfunding platforms allow buying fractional shares of properties for as little as $10. This finally opens real estate investing to small investors.
Sites like Fundrise let you choose diversified portfolios of assets like apartments, hotels, shopping centers, and office buildings managed by professionals. Or invest in publicly-traded Real Estate Investment Trusts (REITs) commission-free through apps like Robinhood.
John invested $5,000 of his $100,000 savings into a blended Fundrise portfolio online, aiming to generate passive income and appreciation over time. The ease of entry made real estate investing accessible for his goals without large upfront costs.
While risks exist, the benefits of diversification, steady cash flow, and leveraging property managers’ expertise offer attractive risk-adjusted returns uncorrelated to stocks. Start small to test the waters, and steadily build your real estate allocation as savings grow. But invest for the long haul, as liquidity is low for these assets.
4. Discover an Exclusive Resource for Incredible Discounts
Why pay full price for travel when strategic loyalty program memberships can save you 20%, 50% or even 80% on the exact same hotels and rental cars? Tapping this insider secret unlocks unmatched savings.
Sign up for major hotel chain and airline frequent guest programs – they are universally free to join. Then after just a couple paid stays or flights, you gain access to exclusive member-only sales with extraordinarily deep discounts.
For example, Emily booked a compact rental car for an upcoming trip using a steep discount only visible after logging into her Avis Preferred loyalty account. She saved over $100 compared to non-members booking the identical car.
Hotel and rental car loyalty programs offer ideal family vacation deals, romantic weekend getaways, city sightseeing and more all at a fraction of the standard price. Best of all, the savings reward you more as your balances grow. But shhhhh…keep this travel hacking secret to yourself!
5. Get a Second Opinion
Seeking prudent financial guidance helps ensure your growing savings work optimally for you. But wisdom lies in crowds, so solicit multiple professional opinions before deciding on big money moves.
Shop around to find fee-only fiduciary financial advisors free of proprietary products or transaction commissions. Ask them key questions about their services and compensation structures. Develop a rapport with 2-3 advisors but continue comparing their viewpoints.
For instance, after one advisor pushed expensive whole life insurance, Janet consulted two more advisors who unanimously steered her toward affordable term insurance instead. The second and third opinions validated the best value choice, protecting her from potential errors.
Just like with medical issues, a second or third set of qualified financial eyes helps avoid costly mistakes. Consistent overlapping advice from multiple experts signals greater validity. Protect your money with impartial wisdom.
6. Don’t Let Home Repairs Drain Your Bank Account
Owning property comes with maintenance costs that can ambush cash reserves when unexpected repairs strike. But savvy budgeting and cost-cutting tactics can help tackle projects without draining your savings.
Build a dedicated home maintenance fund to handle predictable expenses like replacing the roof, water heater, HVAC system and appliances on schedule. Budget 1-3% of your property’s value annually depending on age and condition. Consistently contribute to build this cash reserve.
When Manuel’s furnace broke down, he was financially prepared because he had been adding $200 monthly to his home maintenance fund. He avoided tapping his broader investments to cover the $3,000 replacement.
Preventative maintenance also saves money in the long run by extending equipment lifespan and avoiding damage from deterioration. Learn basic DIY repairs on YouTube. For big jobs, meticulously comparison shop contractors. With foresight, home costs won’t shatter your finances.
7. Protecting Your Loved Ones for Less
As your accounts swell, review insurance coverage to confirm it fully protects your family in case of tragedy. But smart tactics can significantly curb premium costs.
Term life insurance offers far more coverage per premium dollar than pricier permanent life varieties. Regularly comparison shopping rates when policies renew ensures the lowest quotes as age impacts pricing. Consolidating multiple policies with one insurer may also garner you discounts.
For example, at 35, Michael locked in $500,000 of 20-year level term life insurance for only $550 annually by diligently shopping quotes to find the best rate. He saves over 75% compared to expensive permanent policies with lesser coverage.
Choosing the right policy features and amount, plus optimizing costs, keeps families financially secure without overpaying. Re-evaluating needs whenever finances substantially change ensures you don’t end up underinsured or overinsured down the road. With the right strategies, peace of mind costs less.
Summary
Major savings milestones require equally major financial planning upgrades. Follow this guide to intelligently diversify your assets, plan for retirement costs, expand into real estate, maximize travel discounts, seek wise counsel, maintain your home, and optimize insurance premiums.
Building on $100,000, you can create a fortress of financial stability and passive income to enrich your future. But thoughtfulness and discipline will determine if your money continues working harder for you. Take control and put these tips into action to propel your balances to the next level. Your future self will thank you.
Frequently Asked Questions – FAQ
Q: What percentage of my savings should I invest in gold?
A: Financial experts often suggest allocating 5-10% of your overall net worth to physical gold as portfolio insurance against stock market volatility and inflation. Retirees may increase this to 15-20% for greater stability.
Q: Can I use my HSA funds for non-medical expenses?
A: Yes, but you will pay income tax plus a 20% penalty on any HSA withdrawals spent on non-medical items. Best to reserve your HSA purely for healthcare costs in retirement.
Q: How can I research and choose a reliable real estate investment platform?
A: Thoroughly vet real estate platforms through consumer reviews, verified performance data, leadership tenure, regulatory compliance, and press coverage praising responsible practices. Move cautiously with this still emerging industry.
Q: Are there specific websites or apps for finding secret discounts?
A: Apps like Pruvo, Groupon and CouponCabin aggregate discounts and promo codes across thousands of retailers. Hotel and airline loyalty program websites also list special rates for members only.
Q: How often should I seek a second opinion on my financial decisions?
A: Consult 2-3 advisors on any major financial decision impacting thousands of dollars or your long-term money strategy. But even annually reviewing progress with a second advisor can provide valuable perspective.
Q: What are the most common home repairs that can strain finances?
A: Failures of the roof, HVAC system, water heater, appliances, plumbing, electrical, and foundation pose the biggest budget risks. Know their ages and monitor condition vigilantly.
Q: Is term life insurance a cost-effective option for young individuals?
A: Yes, term life offers substantial coverage at very low cost for younger healthy policyholders. Lock in long 15-30 year terms when young before rates rise with age.
Q: How can I update my insurance policies to reflect changes in my financial situation?
A: Review coverage needs whenever major life events occur – births, deaths, marriage, divorce, home purchase, pay raise, retirement, etc. Life changes often necessitate insurance changes.
Q: What are the key takeaways for managing $100,000 in savings effectively?
A: Diversify wisely, plan ahead for retirement, take calculated risks, maximize discounts, seek qualified financial advice, budget for home costs, and optimize insurance premiums. Make your money work hard!