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Wealth Building

Wealth Building
What is Wealth Building?
Define Your Needs

Couple Enjoying A Game Of Golf

The first step in building wealth is defining what you want to get out of life. Vacations with your spouse, kids graduating college debt-free, or leaving a legacy are all reasons to accumulate wealth. Whatever your dream may be, careful thought and extensive planning need to occur to see your dream become reality. Once you have determined your needs and wants, RDA can help you realize your ambitions. Placing an exact dollar amount on what we should have at a certain age may not be the best goal. Instead, consider how you envision your lifestyle and how your wealth can help you accomplish your goals.

Enjoy Your Life

The biggest reason to attain wealth is to enjoy life. Most adults spend their lives working on average 8.5 hours a day. Many of those same adults spend their time working to make someone else’s dream come true. Starting the building process early will not only provide more time for money to work, it will also allow for more restful nights knowing a plan is in place. A plethora of tools and tactics are readily available to the individual willing to plan and persistently adhere to the plan.

Protect Your Loved Ones

Saving for our own futures and protecting our own needs generally come first. We understand we can’t take our possessions with us when we die, but we can certainly leave things for others. Perhaps a grandchild wishes to attend an Ivy League school, or an ailing parent needs nursing home care- accumulating assets can help relieve the financial burdens of our loved ones.



This is purchasing a fixed dollar amount of a specific investment on regular intervals, regardless of market movements. The theory is that buying at different prices overtime, will lead to a lower average cost per share. Many investors currently dollar cost average without even knowing they do it. If you participate in your companies 401(k) plan, each paycheck you are investing a portion of your check on a regular basis, regardless of what the market does. DCA can be a great way to systematically invest without even thinking about it.

Investing regular amounts steadily over time (dollar-cost averaging) may lower your average per-share cost. Periodic investment programs cannot guarantee profit or protect against loss in a declining market. Dollar-cost averaging is a long-term strategy involving continuous investing, regardless of fluctuating price levels, and, as a result, you should consider your financial ability to continue to invest during periods of fluctuating price levels.


Simply put, asset allocation is how much of an asset class (stocks, bonds, cash) you should own to get your expected rate of return coupled with the risk you are willing to accept. Asset allocation is NOT a financial plan in itself. Different allocations will meet different needs; a 30 year old executive can generally accept more risk than an elderly person living on a fixed income.

Diversification and asset allocation strategies do not assure profit or protect against loss in a generally declining market.


As its name implies, passive allocation is simply buying an investment and holding for a long period of time with no changes regardless of markets. Active allocation leads to a more “hands-on” approach. An advisor may buy or sell different investments based on global events, market forecasts, or economic data. A mixture between the two can provide an investor a solid base for providing growth and a portion of actively managed investments to potentially enhance overall returns.

What Why Risk Reward
Stocks Shareholder partial owner of corporation. OWNS EQUITY. Potential for growth. Generally owning stocks have outpaced inflation. Nothing guaranteed. Stocks can only be sold for a price someone else is willing to pay. If no buyers are willing to pay, a shareholder paid too much, may lose their principal. Systematic risk can apply when a fundamentally sound company share price declines as the broad market declines as well. Historically stocks have performed better than most other investments.
Bonds Become a lender to a corporation or municipality. Receive interest income payments. Enhance income during retirement. The price of a bond moves oppositely of the interest rates. Example: you buy a bond today for $1,000 and receive a 5% interest rate. Six years from now, the same bond pays a 7% interest rate. You will have to sell your bond for $902 to compensate for the lower 5% interest rate. Entity may default resulting in loss of capital. If bond is held to maturity, an investor can plan around interest income received to supplement other income sources.
Mutual Funds/
Exchange Traded Funds
Pooled money by many people to hold a basket of stocks, bonds, or both. Creates diversification as many stocks or bonds can be held in a single fund. Fund managers may become forced sellers at inopportune times. You may own a fund that fits your need and has performed well. In a year like 2008, fund managers were forced to sell investments within their funds to meet client demands. This sort of “herd mentality” can have a negative impact on your investment by buying high and selling low. Owning a basket of stocks or bonds can help reduce the amount of risk taken by owning them separately.
Alternatives Investments not tied directly to a stock market. Real estate, gold, or commodities for example. Given lower correlation to more traditional investments, alternatives can further diversify and potentially lower volatility in a portfolio. Alternatives can often be illiquid (not easily sold) investments, especially during time of market stress. During strong equity markets, alternative performance generally does not keep pace. Ex: real estate holdings during 2008 were extremely hard to sell and buyers were not willing to “catch a falling knife.” Added flexibility and lower correlation can potentially enhance the overall performance of a diverse portfolio.

  • Wages, salaries, tips, and other taxable employee pay
  • Long-term disability benefits received prior to minimum retirement age
  • Net earnings from self-employment

In essence, anything you spend time doing to earn a paycheck is considered earned income. We trade our time for money. While this is great during our younger years, as we grow older working long hours may not be that appealing.


  • Buying and selling paper assets, such as stocks, bonds, mutual fund/ETF’s
  • Buying and selling real estate
  • Receiving interest or dividends from investments like Certificate of Deposit or dividend- paying stocks

As wealth is accumulated our money begins to work for us. The more we accumulate the more we have to generate portfolio income by way of compounding interest. Additionally, any long term assets are generally taxed at a more favorable rate. In some cases, portfolio income may be completely tax free.


  • Rental property
  • A business in which the taxpayer does not materially participate
  • Royalties: such as a musical artist

Owning a rental property or leasing farm land can be great ways to generate income. The drawback is that you need a large amount to purchase the asset to begin with.