An estate is a collection of all the property and assets that a person owns at the time of their death. The purpose of growing your estate is to ensure that you have a larger pool of assets to pass on to your heirs. This guide will show you how to grow your estate in various ways so that you can maximize its value.
The Different Ways to Grow Your Estate
There are many ways you can grow your estate to increase the total value of its assets before transferring them. Of course, it would help if you took on a comprehensive portfolio management plan as a long-term strategy. But here are other strategies you could use:
Increase Income Five Percent Annually
One of the most common ways to grow your estate is to increase how much money it earns each year by five percent. This can be done by looking into investments that pay dividends over five percent, such as the stock market. Although this option takes several years to bear fruit, it can help you build up a more significant estate for your heirs to inherit.
Purchase Asset-Backed Securities
Asset-backed securities are contracts between an investor and a company. The investor gives a certain amount of money in exchange for a claim on the company’s assets after it pays off its debts. Although this process is much more complicated than other estate-growing strategies, asset-backed securities can help you grow your estate much faster when it comes to substantial sums of money.
Use Real Estate as an Investment
Another effective strategy for growing your estate is to purchase real estate in the city or town where you live. Real estate prices are extremely high in cities like New York, San Francisco, and Miami Beach, which means that purchasing one million dollars worth of property in these locations could grow your entire estate by at least 30% when you pass it on to your heirs.
Find a High-Yield Savings Account
If none of the above strategies appeal to you, put your money in a high-yield savings account. Although this will not grow your estate by much each year, it can help you build up your assets over several years.
Maximizing Your Estate Growth
Although growing your estate is about taking risks while keeping risk at bay, there are still some things you should keep in mind to maximize the growth of your estate. First, if you find a safe investment option that promises high returns, such as peer-to-peer loans, go with it over riskier options like stocks and bonds.
Next, do not drastically change your lifestyle or spending habits because this can reduce how much your estate grows. For example, if you drive a car that gets twenty miles per gallon, do not purchase a new one that gets forty miles per gallon.
Finally, be patient and do not sell any assets for the first five years after you purchase them to give them time to grow. Although this may seem like an eternity, you will be thankful you waited when your new assets turn out to be profitable.
A Few Tips for Estate Planning
Now that you know what investment options are available to you and how to maximize them, you need to know how to plan for your estate. Here are a few tips that can help you be more successful with your estate planning:
Tip #1 Do Not Let Your Assets Pass on to Your Heirs Unless Needed
One of the most common mistakes people make with their estates is letting their assets pass on to their heirs without considering the size of these assets when they were alive. If you want your estate to continue growing, you must never forget that your heirs will eventually inherit it and be sure that they need the money.
Tip #2 Use Proper Estate Planning Documents
Your best bet is not to rely on your will when it comes to estate planning. Instead, make sure you use proper estate planning documents like living wills, power of attorney agreements, and trusts. These types of estate planning tools will not only protect your family from inheriting your estate too quickly, but they will also give your heirs a more efficient way to manage it.
Tip #3 Store Your Documents in a Safe Place
Now that you know what estate planning tools to use and where to store them, it is essential to know where your documents are kept. If you use a safe to store your documents, make sure that all your estate planning tools are together and easy to find. If you lose one copy, finding the other relevant ones may be challenging.
Don’t wait until tomorrow to grow your estate. If you want your assets to be as profitable as possible, you need to take risks and use the strategies outlined above. Remember, even if you do not invest your money in risky ways, you can still grow your estate by purchasing real estate in the city where you live.