The traditional path to financial security—working for four decades, diligently saving, and investing for retirement—is increasingly being questioned. While it remains a viable strategy, financial experts suggest alternative approaches that could accelerate wealth creation in today’s economic landscape. Preston Seo, a finance influencer and founder of The Legacy Investing Show, recently outlined four steps individuals can take to improve their financial trajectory, offering a compelling perspective on building wealth over the next 40 years.
Diversify Income with a Side Business
The conventional retirement model often involves contributing to a retirement account and letting funds grow over time. However, Seo argues that employees may be shortchanged in this system, citing stagnant wages and fees that erode 401(k) returns. He proposes a different tactic: using income from a primary job to invest in skills and launch a side business. This supplemental income stream can serve multiple purposes, including paying off debt, establishing an emergency fund, or providing more capital for investment. As a side business scales, income potential can significantly exceed traditional salary growth.
Embrace Remote Income for Greater Control
A significant benefit of starting a side business is the potential to generate remote income. Seo highlights that remote work decouples income from the direct exchange of time for money. By being your own boss, you gain flexibility, eliminating time-consuming commutes and allowing for a better work-life balance. This autonomy also allows for strategic retirement planning, offering the option to retire earlier or continue operating the business well into later years.
Maximize Tax Advantages Through Business Ownership
Tax implications play a crucial role in wealth building, often consuming a substantial portion of employee earnings. The Internal Revenue Service (IRS) applies different tax brackets depending on income levels. For single individuals, these brackets are:
- $0 to $11,925: 10%
- $11,926 to $48,475: 12%
- $48,476 to $103,350: 22%
- $103,351 to $197,300: 24%
- $197,301 to $250,525: 32%
- $250,526 to $626,350: 35%
- $626,351 and above: 37%
Business owners can strategically reduce their tax liability by maximizing deductions. Common write-offs include expenses related to healthcare, travel, and even wages paid to family members, potentially saving $10,000 or more annually.
Invest in Growth by Reinvesting Profits
The final step in Seo’s framework emphasizes the importance of reinvesting profits. Rather than immediately withdrawing earnings, business owners should funnel these funds back into the company. This cycle of reinvestment can fuel expansion, innovation, and ultimately, further increases in income and value.
By shifting focus from solely relying on a traditional 40-year career and instead embracing entrepreneurial avenues, individuals can position themselves for greater financial freedom and long-term wealth creation.
In conclusion, Preston Seo’s insights present a compelling alternative to the conventional retirement model. By actively diversifying income streams, strategically managing taxes, and reinvesting profits, individuals can take control of their financial futures and build wealth beyond the confines of a traditional 40-year career. These four steps offer a pathway toward increased financial independence and long-term prosperity
