In the world of finance, there are a lot of misconceptions about wealth. Some people think that to be rich, you have to be in the employ of a huge company, own a huge home, own a fleet of cars and/or have a lot of money saved for the “futures”. Not so!
Basically, to become rich over a period of time, you have to do three important things: make money, save money and invest money. It is these three things that will help you get rich. But as stated earlier, it’s not just these three that will get you rich. There are other things that are extremely important when it comes to wealth creation.
You must be making enough money in order to put all your savings into investments. This is one of the most important aspects of wealth building. The more money you put into investments, the better your chances are to make enough money in a given year. If you’re not investing anything, then you’re not building wealth. Putting in a minimum of 5% of your income is a good rule of thumb.
Saving for retirement, investing for a down payment on a dream house and paying off debt are also great ways to start wealth accumulation. But these are not the only things to look out for. You should also keep an eye on inflation-adjusted investment income. The rate of inflation determines what your starting point should be. Ideally, the inflation-adjusted investment income should be two to four percent a year.
Most people with long-term goals will do well with index funds and savings accounts. The trick is to make sure that you choose low risk options. It’s best to invest in both types of accounts over the long term.
If you want to get rich quickly, think about short-term investments that will give you extra money when you least expect it. These might be things like real estate, commodity stocks and the stock markets. Think carefully about what you want from these investments. You should only get involved in things that will give you long-term growth and avoid putting your money into index funds and other “high risk” investments.
Finally, if you think you might someday need your own home, you should think about getting a second mortgage. If you have good credit, this might be a good way to build wealth. Just remember to withdraw your equity every year and to use the interest from your second mortgage as capital. You can also withdraw your tax-free dividends on a yearly basis.
Building wealth by having multiple investments is a great idea, but you also have to be smart about how you invest. Choose products that are likely to grow and that will not put you in debt. Also, keep in mind that you are trying to build wealth. The goal isn’t to live off of what you have now but to live comfortably for the future. If you take this approach, you will have a lot of money left over for a rainy day!
Here are some methods of saving for wealth building. You may already be saving enough money to reach your goals. If not, there are plenty of opportunities available to you. For example, consider opening up a savings account part-time and spend eight hours a day, five days a week, earning three to four percent, withdrawing no more than one hundred and twenty dollars per month. Keep up this saving for at least one year. At that point, you should be able to have enough money to live on for one year without relying on additional sources.
Another option for your wealth-building strategy is to spend less than you earn. This is an investment strategy that will continue to work throughout your lifetime, even after you reach retirement age. A current interest-only mortgage is a good place to begin; simply take the time to work out a monthly budget based on your regular income and expenses, and you’ll find that it will build enough money to get you through until you reach the one-year mark mentioned above. The beauty of this strategy is that it does not require you to spend any money beyond what you are currently putting in. In fact, you can use the interest-only portion of your loan to finance a portion of the purchases that you would otherwise make, so that you save money and build wealth at the same time.
Finally, another strategy that will help you build wealth over time is to get rich using something you’ve got – like a hobby or a side business, or even something that you possess outright. Look at your email account, your credit card statements, your cell phone bill. Any account with a balance that you have had for more than six months should be considered an asset – make investments in it and you’ll make money over time. You could also consider selling some of your personal possessions to make extra cash; again, do your homework and research how to make your items valuable again. You’ll probably have to wait for a long time before any of these investments pay off, but that’s okay because as you build wealth, you’ll have more money to put into the investments that will make you rich.
As you can see, there are several different ways that you can start building wealth today, if you are willing to put in some work and effort. If you are interested in saving money, you should consider investing in a high-risk business, like options trading, futures trading, or commodity and stock trading. If you have extra money that you want to put into the stock market, you should look into shorting stocks. And if you have savings, consider using those savings to make investments, as well.