Florida Equine Industry Jobs Surpass 113,000 $6.8 Billion in impact

Posted on: May 07, 2018

The latest American Horse Council study pinpoints the Florida equine industry’s large-scale economic impact and industry officials are taking note. The $6.8 billion annual equine economic impact in Florida is up by 33% since the last study over a decade ago. The racing sector’s impact is up 47%.

“That’s significant,” said Lonny Powell, CEO of the Florida Thoroughbred Breeders’ and Owner’s Association. “Florida truly is a horse state. To many, the beach, sun, sand, and oranges are synonymous with Florida, but our state has been steadily adding equines to that list to hang our state’s collective hat on for some time. Equines are becoming a strong part of Florida’s brand.”

“A thriving thoroughbred industry is vital to the state’s economy and to providing world class entertainment to spectators from around the globe,” said P.J. Campo, Vice President of Racing for The Stronach Group. Campo added, “It’s significant that racetrack operators in the state generate $307 million in revenue and create over 1,200 jobs with purses in excess of $105 million. Our Miami-area operation, Gulfstream Park, is one of the gems in the racing world and its right here in Florida.”Campo is referring to the world-class racing experience for both competitors and spectators and one of the world’s richest days of horse racing with the Pegasus World Cup.

“Florida has a robust equine industry with more than $6.8 billion total value added to the state’s economy,” said Florida Commissioner of Agriculture Adam Putnam. “As the third largest state in terms of equine population in the United States, Florida’s horse industry is vital to the state’s
economy. The export of purebred horses from the state is one of our fastest growing sectors and
shows the prominence of Florida’s horses worldwide.”

The numbers also reveal jobs are up by 8% from the last study conducted 13 years ago. Florida has been a proponent of state job growth, especially in recent years, and the employment numbers are important for an overall robust state environment. The labor-intensive industry provides jobs ranging from directly working with horses – including grooms, trainers and equine health practitioners – to a significant number of jobs that exist in the restaurant, hotel and hospitality sector thanks to racetracks and equine venues.

Thoroughbred horse sales, specifically the Ocala Breeders’ Sales, contribute strongly to the hospitality sector as buyers from as many as 49 states and 38 countries flock to the two-year-olds in training sales each spring. Horse sales in the state generated $156 million in revenue in 2016. Tom Ventura, president of Ocala Breeders’ Sales said, “Since 2010, OBS has sold over 22,000 horses for more than $1 billion dollars to buyers from every state except Alaska and 38 different countries. OBS has become the destination to buy quality two year olds, accounting for nearly 70% of juvenile sales in North America.”

In addition to the sales, Ocala, Marion county, is recognized worldwide as the hub of thoroughbred breeding and training carrying the moniker, “Horse Capital of the World™” due to the number of horses of all breeds and world class equine events that are based there. About 15,000 thoroughbreds annually receive early training in the state away from harsh winters and frozen ground. The area is strongly supported by a concentration of equine services, such as leading veterinarians, researchers, feed and tack retailers, equine dentists, and major horse transportation companies.

“Anecdotally, we’ve known locally for a long time the significant impact of equines to our county economy. Our 2015 study commissioned by the CEP provided those hard numbers – a substantive $2.6 billion economic impact to the county. Having a national study that drills down to the state level just solidifies the growth we’ve been seeing in recent years ourselves,” said Kevin T. Sheilley, president and CEO of the Ocala/Marion County Chamber and Economic Partnership.

The latest study reports Florida is home to 387,078 horses with one in four being thoroughbreds in racing, competition and recreation. Thoroughbreds make up the largest segment of the horse population in Florida. Florida nationally is third in horse population behind Texas which is over four times larger geographically and California which over two times larger.

“With over 113,000 jobs and a robust $6.8 billion in total impact, equines continue to have anotably greater economic impact than our signature spring baseball training. The study clearly supports the train of thought that the Florida thoroughbred business, along with our entire equine industry, are not only worth preserving but supporting and growing as well. Florida is most fortunate to have such an industry and agri-business already well established within its borders just as we Floridians are fortunate to live and work here,” Powell said.

With the fourth largest growth rate in the nation, land is at a premium in Florida. Agricultural operations like equine production preserve a significant amount of land. The latest report notes land owned or rented for horse-related purposes has increased to 717,000 acres. The preserved land, mostly in Central Florida, provides rural opportunities for city-bound Floridians and opportunities for diversity of tourism in the state. The report covers figures as of 2016.

Last year, two Florida-breds, Caledonia Road and World Approval won Eclipse awards, the nation’s highest honor for thoroughbreds. They join the list of 52 national champions including six Florida-bred Kentucky Derby winners. Florida has had more winners of Kentucky Derbies outside of Kentucky than any other state. Champions include 28 Breeders’ Cup winners.

“It’s clear to see why the road to the Kentucky Derby begins here in Ocala, Horse Capital of the World™,” said City of Ocala Mayor Kent Guinn, “ It is a major epi-center of the horse world and is part of our daily life here integrated into our hometown history, arts and culture. It’s not surprising the state numbers would reflect what we’ve known in Marion County for a long time, that the industry makes a significant impact.”

“The equine industry is a key driver of the local economy in Marion County,” said Kathy Bryant, Chairman of the Marion County Commission. “Ever since Needles’ triumph in the 1956 Kentucky Derby, we’ve proudly been the home to countless thoroughbreds who attract jobs and excitement to our community.”

Incentive programs offered in the state are a key to the industry and have grown in recent years.

“Florida consistently ranks in the top two to three in foal crop annually. Incentives in the state from breeders’ and owners’ awards, to bonus money for races of all types give Florida-breds robust opportunities to earn more for their owners who have invested in them. The Florida Sire Stakes series promotes stallions standing in the state and gives FSS eligible Florida-breds going into the sales arena opportunities for their buyers to race in the prestigious series,” said Powell. Stephen W. Screnci, president of Florida Horsemen’s Benevolent and Protective Association, Inc., “It is very rewarding to see strong Florida numbers and with new incentive additions to racing meets, the economic impact should continue to further enhance our already strong all-year
program here in Florida.”

“We are continually seeking to enhance the state’s breeding and racing programs by providing incentives for horsemen to race Florida-breds at Tampa Bay Downs,” said the track’s Vice
President and General Manager Peter Berube. “We also recognize the importance of Florida’s thoroughbreds and to attracting new investors in the state.”

Bob Jeffries, president of the Tampa Bay Downs HBPA, offered his enthusiasm for the study noting the cooperation of industry members to continue the growth of the industry.

“We have the largest stakes program in Tampa Bay Downs history currently. When the track, the horsemen and the Florida breeders work together as a team, good things happen for everyone. And good things are happening,” Jeffries said.

Powell added, “Our job at FTBOA is to promote, advocate for and enhance the economics of our state-wide industry at home as well as outside our state and national borders. This fresh American Horse Council study clearly demonstrates the importance of our mandate on behalf of the entire state industry. Our breeders, farms, tracks, owners, conditioners and equine professionals are top-shelf, which, along with our weather and quality of life, make Florida the greatest place to breed, sell, own and race.”

The industry is supported by Florida’s Department of Agriculture and Consumer Services which creates a favorable business climate including no tax on stallion seasons, exemptions for horses purchased from original breeders and a breeding stock exemption. Feed and animal health items are exempt along with certain farm equipment. Property tax breaks are also provided to Florida’s horse farms.

New to the study was the addition of analysis of the impact and scale of equine retirement, sanctuaries, and therapy programs. These programs among other re-training programs give thoroughbreds that are no longer racehorses opportunities for second careers in horse sport competitions and recreation. These programs added multi-millions in impact, slightly over $114 million, compared to the billions in the racing sector, but their importance cannot be unscored enough in showcasing the versatility of horses in second careers.

Timely Estate Planning Technique for Ocala Farm and Equine Owners May 8, 2018

Considering the potential Coastal Connector Alternative Corridor Evaluation(ACE) Proposals, could have a negative impact for Marion County property and business owners, you may be thinking about selling all or a partial sale of your property prior to  government property interruption (Eminent Domain). Property values including residences may depreciate as I experienced this in New Jersey.  You may find it worthwhile to have a discussion with a competent CFP professional and tax advisor as to some estate planning options.

If you have pent-up taxable capital gains you may want to explore  some Charitable Planning strategies that can benefit you as well as your chosen Charities to minimize capital gains taxes and create a memorable legacy.

This is a strategy that helps to minimize capital gains taxation and can benefit your community or passion in making a Charitable bequests as soon as implemented. The Gates foundation and others do this frequently to help charitable organizations and provide tax relief as well. I welcome your call should you like to have a discussion as to some resourceful Estate planning and tax strategies. You can  view http://www.flretire.com as to my blogs for further information and or seek Fidelity Charitable.org and SEI Charitable Relationships for further information. I am affiliated with both entities.

Tom Cooper CFP, CPPT

The best charities to give to in the wake of Hurricane Harvey

Over the weekend, Hurricane Harvey slammed into the Gulf Coast, destroying homes and infrastructure in Texas, displacing tens of thousands of people, and killing at least eight. As many as 13 million people are under flood watches and warnings.

After landfall, officials ordered several Houston-area counties to evacuate, due to fears of more flooding. Experts are forecasting up to 50 inches of rain in and around Houston, making many homes inhabitable. An estimated 30,000 people will likely need to find refuge in shelters, since flooding will linger, according to The Washington Post.


People walk down a flooded street as they evacuate their homes after the area was inundated with flooding from Hurricane Harvey on August 28, 2017 in Houston, Texas. Getty Images


Victims in Texas and Louisiana will likely need millions of dollars in aid. On Monday, President Donald Trump said he believes Congress will act swiftly to provide funding to affected areas. Charities — both big and small — will also step in.

But not all charities are created equal. Charity Navigator, a nonprofit that has independently rated over 8,000 charities, compiled a list of some of the best organizations to donate to in the wake of Harvey. Its team considers several factors when giving a charity a score out of 100. These include program expenses (e.g. how much of the donations go straight to victims) and transparency (e.g. audited financials prepared by an independent accountant).

The charities that Charity Navigator recommends for Hurricane Harvey, along with their scores out of 100, are below.

Note: Right now, it is not clear whether all these organizations will spend 100% of donations received on Hurricane Harvey relief and associated expenses. But in past large-scale disasters, high percentages of donations have directly gone to victims.


St. Bernard Project — 93.66

Founded in 2006 after Hurricane Katrina, St. Bernard Project works out of a parish near New Orleans. After disasters, the organization rebuilds homes, advocates for recovery strategies, and advises policy makers, homeowners, and business owners about resilience.

Samaritan’s Purse – 96.32

Smaritan’s Purse is a nondenominational, Christian organization that provides spiritual and physical aid to people affected by disaster and poverty around the world. It focuses on helping victims of war, poverty, natural disasters, disease, and famine.

GlobalGiving — 96.46

Founded in 2003, GlobalGiving is a funding platform that helps people find causes they care about. Users select projects they want to support, make a contribution, and get regular progress updates.

Convoy of Hope — 96.46

Convoy of Hope is a faith-based nonprofit that works to fight hunger around the world. Founded in 1994, the Springfield, Missouri-based charity also responds to disasters.

All Hands Volunteers — 96.66

All Hands Volunteers works to address the long-term needs of communities affected by disasters. Over the last 12 years, the organization has enlisted over 39,000 volunteers who helped 500,000 people worldwide.

Americares — 97.23

Since its founding in 1979, Americares has provided more than $13 billion in aid to 164 countries, including the United States. It is headquartered in Stamford, Connecticut, and specializes in fighting ongoing health crises.

Direct Relief — 100

Direct Relief is California’s largest international humanitarian nonprofit organization. It provides medical assistance to help people affected by poverty and disaster in the US and around the world.


Other local organizations

  • Houston Food Bank
  • United Way of Greater Houston
  • Food Bank of Corpus Christi
  • Houston Humane Society
  • San Antonio Humane Society

These local charities have all received scores between 85 and 100, and work in the most heavily affected areas of Houston.

Sara Nason, a Charity Navigator spokesperson, told Business Insider that choosing between donations to a local or national organization is a matter of preference. The main thing to look for is that the charity is an established and highly-rated organization.

“Local organizations will continue to work in the community long after the disaster has happened, as they have an established presence in the community. National and international organizations deal with disasters at a large scale, with an established infrastructure and coordinated teams that specifically hold a skill-set for responding to crises,” she said in an email.

Are You Prepared for Your Parents’ Retirement?

March 7, 2017

Thomas J Cooper, CFP®, CPPT profile photo
Thomas J Cooper, CFP®, CPPT
Certified Financial Planner
NAMCOA (Naples Asset Management Company®, LLC)
Mobile : 352-857-7273

From the time you were little your parents took care of you, but are you prepared to take care of them in their time of need? It’s not something any of us like to think about. But the aging process is inevitable, meaning one day your parents’ capability to manage and execute their finances appropriately will decline.

Although it may be one of the most difficult conversations to have with your parents, planning for what’s bound to happen is better than being caught off guard down the road when it does. Studies have shown that financial decision-making peaks around 53 and declines gradually there on after. This means having a conversation about the future of your parent’s finances should happen sooner rather than later (and be documented for future reference).

Losing financial independence is not something anyone wants, but is bound to happen. Make this conversation a priority even if your parents think of themselves and the task of managing their finances a burden to you.

ready for parents retirement

Make It a Family Affair

Retirement affects more than just the retiree – make a point to have a retirement plan that the whole family is a part of. As adult children, it is important to sit down and discuss your parent’s long-term plans as well as financial goals. Things to discuss in such a conversation with aging parents include:

Income and expenses

Contact information for their financial advisor

Permission to contact their financial advisor

Whereabouts of their financial records including tax returns

The majority of people will need help with their finances after entering retirement years. Fidelity Investments found that 60% of aging adults worry about burdening their families with the responsibility of their finances.

Losing your financial independence is unavoidable to an extent, so it is better to plan for the inevitable, especially when it comes to something as important as your financial future.

Healthcare Expenses

Healthcare is generally speaking the biggest retirement expense, not to mention the most difficult to plan for. When planning for retirement, which could be decades away when you begin, it is impossible to know what type of health conditions may arise that require additional funding. With such an uncertain future, it is important to have a proactive plan in which healthcare savings are included which hopefully, your parents have done.

As a child of an aging parent, make sure your discussion with your parents about health care includes:

What type of medical insurance do they have?

Do they have long-term care insurance?

Who are their doctors?

Do you have permission to speak with their doctors?

Do they have a plan for paying for at home care if the need arises?

In addition to healthcare, another important piece of the conversation should pertain to the legal documents that piece this all together.

Wills and Estate Documents

Possibly the touchiest of all family discussions is that of wills and estate documents. It is important to be aware of the type of estate planning that your parents have done and who their attorney is in case the need arises to contact them.

Conversations in regards to estate planning are some of the most important to have with an aging parent to prevent loved ones being left unaware of what the documents contain or even of their whereabouts when a parent passes away.

Getting Started

Financial conversations can be uncomfortable for everyone involved but when it comes to family and the future of your loved ones, planning for the inevitable is a necessary evil. Permission granted by Investopedia and Advisor-Stream

Avoidable IRA Disaster

IRAs are great financial tools that carry valuable tax advantages, and are an important part of many clients’ portfolios. When IRAs are part of an estate, however, they are subject to rules that are highly inflexible. When survivors receive advice that does not address these rules adequately, there can be disastrous financial consequences.

A ruling handed down in U.S. Tax Court in December provides one such tax horror story, and it could easily have been avoided. It is worth recounting in detail to uncover lessons that could help advisers in creating estate plans that include IRAs.

The case involved the estate of a Florida man, Thomas W. Ozimkoski Sr., who died in August 2006. Just seven months before his death, Ozimkoski executed a will that left the bulk of his property to his wife, Suzanne D. Oster Ozimkoski, and named her as personal representative of his estate. At the time of his death, Ozimkoski had a traditional IRA at Wachovia and a 1967 Harley-Davidson motorcycle.

He also had a son, Thomas Jr., who was unhappy about the will. The son went to probate court and faced off against Suzanne, his stepmother. The IRA custodian, Wachovia Securities, froze the funds in the IRA pending the outcome of the litigation.

When the dust settled, a settlement had been reached. Suzanne would pay Junior the sum of $110,000 and transfer title of Senior’s motorcycle to him. The settlement provided that the payment would be made within 30 days of the date on which Senior’s IRA was unfrozen by Wachovia. The settlement also said that “all payments shall be net payments free of any tax.”

CARRYING OUT THE SETTLEMENT

The motorcycle transfer seems to have gone smoothly, but the same was not true of the payment of the IRA funds.

On July 2, 2008, Wachovia transferred $235,495 from the deceased’s IRA to an IRA set up in Suzanne’s name. Suzanne took a distribution from her IRA and wrote a personal check for $110,000 to Junior to make the payment required under the settlement agreement. She also took other distributions from her IRA in 2008 for a total of $174,597.

Wachovia issued a 2008 Form 1099-R showing taxable distributions of $174,597 to Suzanne in 2008. The distributions were coded as early distributions because Suzanne took them from her own IRA and she was under age 59 ½.

Suzanne filed her 2008 federal income tax return late and reported only her wage income from the Boys and Girls Club, just under $15,000. She did not report any of the IRA distributions as income.

The IRS subsequently issued a notice of deficiency to Suzanne for 2008. The IRS said she owed $62,185 in taxes and a 10% penalty on the IRA distributions. It also hit her with an accuracy-related penalty of $12,437. Suzanne disagreed and brought her case to the Tax Court, representing herself.

The Tax Court held that Suzanne owed income taxes, the 10% early distribution penalty and part of the accuracy penalty. The court did not buy Suzanne’s argument that the IRA distributions should not be included in her income because Junior was entitled to $110,000 of the IRA under the settlement agreement. Instead, the court agreed with the IRS that the distributions were taxable to Suzanne because they were from her own IRA.

WHO IS THE BENEFICIARY?

The Tax Court began its decision by tackling the important issue of exactly who was the beneficiary of Senior’s IRA. Generally, the beneficiary of an IRA is whoever is named on the IRA beneficiary designation form. However, there was a problem. Wells Fargo, the successor to Wachovia, did not have Senior’s IRA beneficiary designation form. It is unclear whether the form had never been filled out or somehow went missing.

In the absence of the form, the estate became the beneficiary by default. Because Suzanne inherited through the estate, the IRA became a probate asset, which can be subject to a will contest. If the beneficiary is named on IRA beneficiary form, however, the account bypasses probate and goes directly to her.

Because the estate, not Suzanne, was the beneficiary of the IRA, Wachovia “incorrectly” rolled it over to her IRA, according to the court. What Wachovia should have done, the court said, was distribute the IRA assets to Senior’s estate rather than to Suzanne’s IRA. The court said it had no jurisdiction to fix that mistake.

The court expressed sympathy for Suzanne, noting that her attorney during the probate litigation clearly failed to counsel her on the tax ramifications of paying Junior from her own IRA. However, the court said it could not change the fact that the distributions she received were from her own IRA and, therefore, taxable income.

The court also said Suzanne owed the 10% early distribution penalty on the funds taken from her IRA. There is such a thing as an exception to the penalty for distributions due to death, but that did not apply to her. This is because a spouse beneficiary may no longer claim the exception if she rolls over the funds from her deceased spouse’s IRA into her own IRA and then withdraws the funds from her IRA.

The court gave Suzanne a break on the accuracy penalty. The court said that in light of all the circumstances, including her limited experience, knowledge and education, she had acted in good faith with respect to the portion of her underpayment attributable to her failure to include in her taxable income the $110,000 she paid to Junior. However, she was still liable for the penalty on the other IRA distributions she took.

LESSONS LEARNED

This case offers several lessons for advisers and their clients:

The importance of beneficiary forms. It’s easy to imagine another, much happier, outcome in this case. When Thomas Ozimkoski Sr. updated his will to leave everything to his wife, he should also have updated his IRA beneficiary designation form. If he had, the IRA would have passed directly to her and never became part of the disputed probate estate.

A competent adviser would have realized that any payment coming from an IRA will be taxable. If one party is not paying the tax, then someone else is.

The need for competent advisers. One thing that Suzanne Ozimkoski lacked in this case was advisers who understood the IRA rules. She needed a knowledgeable attorney who could have advised her better on the outcome of her settlement agreement.

A competent adviser would have realized that any payment coming from an IRA will be taxable. If Junior is not paying the tax, then someone else is. A competent adviser would have realized Wachovia’s error and had the custodian reverse the transaction and retitle the inherited IRA properly.

Naming a spouse on the beneficiary designation form allows her to roll over the funds to her own IRA. This avoids the result in this case, where the estate was the beneficiary and the rollover was “incorrect.”

Avoid “incorrect” rollovers. Naming a spouse on the beneficiary designation form allows her to roll over the funds to her own IRA. This avoids the result in this case, where the estate was the beneficiary and the rollover was “incorrect.”

With proper advice, the spouse could have elected to remain a beneficiary rather than do a spousal rollover. By remaining a beneficiary here, the spouse could have taken distributions she needed and avoided the 10% early distribution penalty.

A positive outcome in one court may be irrelevant for tax purposes. The settlement agreement said that all payments to Junior shall be net payments, free of any tax, and the widow was under the impression that she owed no taxes. But tax rules did not allow this outcome. During the settlement process, someone should have advised her that there was no way to avoid the tax on the IRA distribution.

After the mistaken rollover, the Tax Court could not unwind that transaction and instead had to decide the widow’s tax liability based on the erroneous transfer of the IRA assets to her own account and her subsequent distributions.

How the death exception to the 10% penalty actually works?

This exception to the penalty is for beneficiaries, but does not apply when the spouse rolls the retirement funds over to his or her own IRA. Once a spousal rollover occurs, the spouse is then the IRA owner and not a beneficiary.

If you sound confused, let me help you!

Tom Cooper, CFP.

tcooper@namcoa.com

Oh no, what if I don’t want to live too long?

The potential for living a very long and healthy life is greater now than ever before. New technologies, such as genomics and nanomedicine, are in the process of changing the face of medicine. For those who can afford state-of-the-art medical evaluations and treatments, as they are not usually covered by traditional health insurance, opportunities are increasing to live rewarding lengthy lives.

For the ultra-wealthy, who have considerable liquidity, paying for cutting-edge healthcare is often not a problem. On the other hand, for the wealthy as well as for the ultra-wealthy whose assets are locked up in one manner or another, such as being predominately the privately held family business, steps can be taken to address the prospective costs of dealing with higher probability illnesses.

living to 120

According to Daniel Carlin, M.D., founder and CEO of WorldClinic, one of the foremost concierge healthcare firms, “Comprehensive longevity planning uses advanced medical testing, like genomics and biomarkers, to create expert healthcare plans. For many affluent families, this healthcare planning also incorporates financial planning. This means ensuring that the affluent families have the financial resources to cover the costs of these tests, cutting-edge treatments, and likely rehabilitation expenses.”

“A number of sophisticated wealth management strategies are used with the affluent to address their diverse needs and wants including having the funds available to deal with possible illnesses and rehabilitation,” says Daniel Geltrude, Managing Partner of Geltrude & Company and Director of the firm’s Family Office Practice. “Sometimes, part of the financial answer is for the wealthy to purchase life insurance, which is used in a number of ways. It’s many times the easiest and most cost-effective solution. For example, there are ways a business owner can use traditional or private placement life insurance to pay for these heath benefits.”

Clearly for the wealthy, comprehensive longevity planning will become increasingly important for them and their loved ones. In a large percentage of situations, life insurance can play a meaningful role in helping to deal with the potential considerable costs of state-of-the-art healthcare.

 

This article was written by Russ Alan Prince from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.

4 Steps People Who Weren’t Born Rich Can Take to Get Rich

President-elect Donald Trump was born into wealth. His first job was literally handed to him in the form of a lofty title and loan from his real estate tycoon father. Most of us aren’t that lucky. In fact, it’s incredibly far from the norm to spend day one of your life rich.

The path to wealth for most people is more nuanced, complicated, riddled with hurdles and unique to personal circumstances. While Trump had wealth handed to him, the rest of us have to do it the other way around. We have to make smart decisions with the money we do have and build wealth over time. Here is the swiftest way to do it:

1. Pay down high interest debt.

The first step to wealth is to settle outstanding debt. Holding significant debt inhibits people’s ability to make new investments and buy assets. Start with high interest loans and work backwards. Low cost debt can be okay — think under 3 percent — but high-interest loans, with rates between 5-20+ percent, should get paid off as fast as possible. In order to sustainably gain control of your finances, pay down debt until you have paid off all loans with higher interest rates.

2. Spend less than you make.

This step is perhaps the easiest to say and hardest to do. Get a handle on what your monthly expenses are and look to get that amount to be less than your monthly income. The key is lowering spending to less than your income so you can build a savings cushion. Start slow by putting away a certain amount every month that allows you to keep enough money on hand to pay bills, pay off debt and live somewhat comfortably.

3. Build a savings cushion.

You never know what could happen to your income. Maintaining a savings cushion to cover three to sixth months of expenses in savings is an important contingency plan. Small business owners take a similar approach. Many work to build a three to six month liquidity cushion so they can stay afloat while establishing their businesses and scaling their operations to meet growing consumer demand.

4. Become an owner.

Start investing after your savings cushion is built. We have all been told “work hard and you will be rewarded,” but that doesn’t mean you will be wealthy. Wealth comes from ownership. Take savings above your cushion and buy a diversified portfolio of stocks, bonds and other assets that will grow. Monitor the progress of your investments, and keep expanding your portfolio.

People don’t build wealth just by working hard. They build a nest egg by owning things that become more valuable over time and investing responsibly. In order to become an owner, you need to pay down debt, spend less than you earn, save enough to live for three to six months without an income — just in case — and invest in attainable assets. The jury is still out on whether we can still classify President-elect Trump as lucky to be hand-delivered wealth, but the door is open for everybody else to earnestly pursue it if they follow these steps.

Enjoy Entrepreneur Magazine. Permission granted to Thomas Cooper