Congratulations for reaching a six-figure net worth! It’s a milestone worth celebrating.
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As you grow your wealth, however, your financial strategy must grow and evolve to keep accelerating your success. Make these money moves as you build wealth into the six figures and beyond.
Pay Off High-Interest Debts
Still have credit card balances? Personal loans? Student loans with double-digit interest rates?
Prioritize paying them off. After all, what’s the point of investing for a 10% average return on stocks if you’re paying 16% interest on credit card balances?
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Deepen Your Emergency Fund
Eventually, you want three to six months’ worth of living expenses saved in your emergency fund.
You don’t have to get there overnight, however. Start by simply saving $1,000. After that, you can start splitting your savings from each paycheck to go in multiple directions, with some building up your emergency fund and the rest going toward other savings goals and investments.
Start Planning in Decades, Not Months
The less money a person has, the more immediate their financial planning. They worry about how to cover groceries this week and rent this month.
The longer the horizon you plan for, the better your financial results likely will be. Financial planner Lissa Lumutenga urges people to start with a few simple questions: “What am I building toward? Which goals are short term vs. long term? How can I structure my money so it aligns with my values and goals?”
Invest Simply and Consistently
Reaching those long-term goals requires investing money for compound returns, not just parking cash in a savings account where it loses value to inflation each year.
At a $100,000 net worth, you should keep your investments simple. “Simple rules are the easiest to follow, and the most likely you’ll stick with consistently,” said Ben Waterman, co-founder of wealth management platform Strabo. For example, a free robo-advisor can automatically pull money from your checking account every two weeks and invest it in diversified index funds for you.
Invest Through Tax-Advantaged Accounts
The less money you lose to taxes, the faster you’ll build wealth.
With a $100,000 net worth, you’re likely still on the early side of your financial journey. Consider investing through a Roth IRA or Roth 401(k), so your investments can compound tax-free in the decades between now and retirement.
Also look into employer matching contributions, which pay an immediate 100% return on your investment. “Beyond the matching contributions, investing through your 401(k) will both automate your investments and provide tax benefits,” explained Jay Zigmont, Ph.D., CFP, founder of Childfree Trust.
Weigh the Pros and Cons of Buying a House
Many people just assume that buying a house makes a better financial move than renting. But depending on your local market and plans, that may not prove true. “Buying a house is a choice, not a requirement,” Zigmont said.
If you don’t know how long you want to live in a given city or neighborhood, or don’t know how your needs might change over the next five years, renting offers flexibility. Besides, in some markets, the math to buy may not make sense. Use a rent versus buy calculator like Realtor.com’s to run the numbers in your neighborhood.
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This article originally appeared on GOBankingRates.com: 6 Money Moves To Make Once Your Net Worth Reaches $100K
