Save Your Money
The romantic image of a single stock trade resulting in a six figure windfall is nice to dream about, but unrealistic to expect.
Instead the most effective way to earn a real return on the work you’ve put in to generate that wealth is to save your money. The first step in saving is to ensure you spend only what you need to spend each month. For this you need a budget.
Budgeting requires that you first track your spending from month to month, then analyze where you can make cuts that won’t immediately impact your quality of life. You will likely need to make changes over time to reflect life changes like new children, pets, or moving to a new city, but a solid budget will be flexible in this regard.
Once you know what you need, you can start setting aside money as a cushion and then start putting extra money beyond that cushion into a retirement account that will grow over time.
The goal here and the thing that so many people fail at is to determine what is most important and what you really need. A new iPhone? Not a necessity. A new phone because your old one got dropped down a flight of stairs? Sure.
Be smart about your investments. Don’t dump money into the next “hot” stock. Find long term investments that make sense and use them to grow your wealth over time. You will always have to take some risk but if you plan accordingly, you can mitigate it well.
Don’t be afraid to borrow from banks either. Consider that if you borrow $100,000 and pay 5% interest on it each year, you can make a profit simply by putting that amount of cash into the bank and drawing the 4% fixed interest that it would in a savings account – the result would be a massive growth over the course of 20 years, simply by having that money in the bank.
In terms of stocks, diversify as much as possible. Choose a variety of strong performers like physical commodities, companies that have a strong foothold in their market, high return on equity stocks and precious metals and mining stocks – all strong performers over time.
If you can effectively find new sources of income, save your money wisely over time and then invest it carefully into the right places, you will grow wealthy steadily but surely.