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The 20 Essential Wealth-Building Rules for 2017

Expert-level guidance from today's top personal finance professionals.

The market has been soaring the past few months—thanks in large part to the incoming administration's vows to cut corporate taxes and deregulate industry—but you needn't be Warren Buffett to know that what goes up must eventually come down.

So what does this mean for your porfolio moving forward?

To find out, we reached out to some personal finance professionals at the top of their game—experienced money managers hailing from BlackRock, Merrill Lynch, and other reputable firms—to glean their high-level tips for ensuring that your wealth continues to grow in the coming months and even years. And remember: once you've got the portfolio of your dreams, don't miss 25 Things Rich People Always Do.

Be Tax-Smart

"BlackRock believes stock markets are in for an extended period of subpar returns, even with the recent rally. That means minimizing costs is more important than ever," says Martin Small, Head of U.S. iShares at BlackRock. "Investors should make this the year to be tax-smart by aiming to reduce capital gain distributions that are triggered when fund managers realize a profit on the sale of a security. Regardless of your fund's return, you can owe taxes on it."

So what should you invest in this year? ETFs.

"ETFs are tax-efficient and have lower turnover than actively managed mutual funds (just 3% of iShares ETFs distributed cap gains over the past five years.) Investors should accentuate "good" taxes instead with potentially higher-yielding ETFs such as dividend growth and preferred stocks," Small add.

For more great investing advice, check out 25 Rules for a Wealthy Retirement.

Diversify Your Investments

"You'll want to invest and build wealth for the long term. This doesn't mean that you make an investment and hope it'll grow miraculously on its own. Be diversified in your investments and dollar cost average," says Melissa Spickler, a Merrill Lynch Financial Advisor based in Bloomfield Hills, MI. "Stay invested when the markets fall. This is the biggest mistake people make is they panic and never go back in at the right time."

Automate Everything

"Automate your savings. Automate your investing. Don't leave anything up to chance," says Mandi Woodruff, Executive Editor at MagnifyMoney and Creator/Co-host of The Brown Ambition podcast. Woodruff also advises setting small goals for yourself, such as saving a portion of each paycheck.

"Work at achieving those small goals and what you are really doing is building the habits you need to achieve wealth later on. Wealth will come with time, but you have to start establishing those good healthy financial habits early," she explains. If you make your goals too big or too unachievable, then you'll just get discouraged and after a month or two you'll give up.

And consider downloading one of these 6 Great Personal Finance Apps.

Start From a Solid Foundation

"People get excited about the stock market and want to jump in with both feet right away," says Ajamu Loving, PhD, and Professor of Finance at The American College of Financial Services, but you should make sure you have a solid foundation in place first. "If you don't have proper health, life, and other insurances and an emergency fund, you could be forced to sell those stocks for a loss because of a more pressing need," Loving explains.

Cut Investment Expenses

A lot of people start the year with big plans to save more, but then struggle to make it happen. "If it's a simple willpower or overspending issue, it's easier to solve, but if you just don't have the extra money to save, it's harder," says Arielle O'Shea, Investing and Retirement Specialist For NerdWallet. One tip that works for everyone: eye your investment expenses with a pair of scissors in your hand.

"These can eat up your wealth in a way you wouldn't believe, adding up to hundreds of thousands of dollars by retirement if you're not careful. Many people don't even realize they're paying them. So the start of the year is a great time to do a fee audit, looking at both your investment expenses and your account fees to see if you can do better elsewhere."

Budget to reward yourself

Develop a budget and make it a point to include a vacation and fun. "Reward yourself for working hard and having the discipline for following your financial plan and achieving your goals along the journey," says Peter J. Creedon, CFP®, ChFC, CLU, and Founder and CEO of Crystal Brook Advisors. "The goal is not to just achieve your goal but to enjoy the experience along the way and the reward of obtaining the objective."

Invest Your Raise or Bonus

"Many people get raises or bonuses. If you earn a raise, simply have the amount of the raise (after taxes) sent straight to pay down your credit card bills, sent to your retirement account or an investment account," advises Robert R. Johnson, President and CEO of The American College of Financial Services. "The beauty of this strategy is that you don't have to give anything up. You had gotten used to living on the amount of your salary and don't have to suffer the feeling that you are giving something up that you have experienced. Such a strategy can lead to large improvements in your financial position."

Manage Interest-Sensitive Debt

"Managing interest-sensitive debt should be the top priority for 2017 given the expected central bank rate hikes this coming year," explains Tom Stringfellow, President and CIO of San Antonio-based Frost Investment Advisors. "Building wealth is not only a function of developing a thoughtful investing and savings plan but also the prudent management of your family's debt burdens and interest rate-sensitive floating liabilities. The latter having the potential of negatively impacting both personal cash flows and balance sheet health."

Get Your Employer to Match Your Retirement Savings

"You do not need to be an accountant (or a financial planner) to know that your 401(k) match from your employer makes saving for retirement a good deal. In other words, who wouldn't want a free pay raise?" says Jon Luskin, MBA and fee-only CFP & fiduciary at Define Financial. Jon blogs about personal financial planning for employees of Deloitte at

Savings 101: Don't spend what you don't have

Yes, this is obvious, but it's always worth repeating, says Steve Sivak, Founder of Innovate Wealth. "Spend less than you make," he says. "The main problem with the financial industry is they like to make it more complicated than that, but it's not."

No amount is too small for investing

"Research has consistently shown that the single most important action one can take to accumulate wealth is to regularly set aside money for investing," explains Walt Woerheide, PhD, ChFC®, CFP®, RFC®, Professor of Investments at The American College of Financial Services and Frank Engle Chair of Economic Security Research. "The person who sets aside $100/month and actually invests that money will, in the end, be much further ahead than the person who waits for a good investment opportunity."

Try "Defined Outcome" Investing

Defined Outcome Investing refers to an investment method which shapes the potential outcomes of an existing index or security (e.g., the S&P 500) to fit pre-set protection and return levels, allowing for a more controlled investment experience. According to Michael Riley, managing member of Coastal Management Group LLC, "Defined Outcome Investing will change the world of investing." Riley also advises "buying index funds or ETFs with low fees when fear is palpable" to increase wealth.

Embrace the Side-Hustle

"To begin building wealth many of us need to understand how to create multiple income streams," says Anna Sergunina, CFP and an advisor at MainStreet Financial Planning. "With the on-demand world we live in today, there are so many opportunities we can use to create side hustles to help us earn extra income, such as drive for Uber, rent a spare room in your house, deliver a meal, etc. The best part is that most of these opportunities allow you to pick the time you want to work, that way you can build extra income around your life."

At long last, create an actual Financial Plan

"Prepare a financial plan—those who plan do better!" says David Littell, JD, ChFC®, and Professor of Retirement Income Planning at the American College of Financial Services. It's easier than ever these days. "Just work with an advisor, do it yourself with software available on the web—just do it!"

If you need any extra help, be sure to try one of these 6 Great Personal Finance Apps for 2016.

Ditch Your Bonds

Gary Gordon, a Wall Street veteran and author of the blog, Financial Fables and Facts, advises: "Sell bonds that you may own. Interest rates are likely to go a lot higher this year, which will erode the value of your bonds."

Embrace Interest

"Don't underestimate the power of compounding, or earning 'interest on interest,' where your original savings generate a return that creates more money. Investing and contributing regularly to an account can significantly increase your assets over time as your savings grow and the effect accelerates especially in tax-deferred accounts like your 401(k) and IRA," says Judith Ward, CFP and senior financial planner at T. Rowe Price. "For instance, a young adult retiring in 40 years makes an initial contribution of $1,000 into a Roth IRA and adds $100 each month. After 40 years, he or she could have more than $250,000 within that account. (This assumes an average annual return of 7%)."

Know Your Risk-Tolerance Level

"One of the best ways to build wealth is to ensure that your investment portfolio appropriately matches your risk tolerance," says Benjamin Cummings, PhD, CFP(R), and Associate Professor of Behavioral Finance at The American College of Financial Services. "Some people are willing to take on a lot of risk, yet they invest primarily in CDs and money market accounts. Others are invested too heavily in stocks, and when there's a downturn, they panic and sell to cash. Make sure your investments match the risk you're willing to take."

Educate Yourself

"There is no greater investment you can make that has as big of a return than improving your career path," says Scott Alan Turner, personal finance expert and author of the best-selling book, 99 Minute Millionaire. "A graduate degree, a certification, taking on more responsibility at your current job, or attending a conference to network and learn more all have the potential for big salary increases. Someone who socks away $10K in their 401(k) can make on average a $1,000 (10%) return each year. The same amount invested in additional education can land you a new job with a $10,000-$20,000 increase in salary depending on the field of work. Make sure to do your research on the income potential vs. the cost of the training. Nobody ever built wealth getting a graduate degree in underwater basket weaving."

Decide How Much You Want to Save Before Setting a Budget

"One thing that really makes a difference for my clients is deciding what they want to save before setting a budget and reviewing it monthly. You respect what you inspect, so if wealth building is important, then you need to review progress at least monthly. Once you know what you're saving for and the target amount, then you can spend without worry whatever is leftover," says Mindy Crary, MBA, CFP® and author of Personal Finance That Doesn't Suck.

"And turn up the dial on your savings monthly…if you saved $1,000 last month, how can you increase that next month? People might not want to do this every month, but it's good to get into the habit of questioning, because it helps you really clarify what spending is essential and what is just unconscious, unstrategic spending."

And, Finally: "Save, Save, Save"

"Save early and save often," says Brian Jacobsen, Chief Portfolio Strategist at Wells Fargo Fund. "Investment returns cannot consistently make up for a poor savings discipline."

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