Wealth: everyone wants
it, but few people actually know what they need to do in order to get wealth.
Becoming rich takes a combination of luck, skill, and patience. You have to be
at least a little lucky; you build on that luck with your skillful decisions,
and then you continue weathering the storm as your wealth grows. There's no
reason to lie to you: getting rich isn't easy, but with a little bit of
perseverance and the right information, it's definitely possible.
Put money in the stock market.
Invest money in stocks,
bonds, or other vehicles of investment that will give you an annual return on
investment (ROI) great enough to sustain you in your retirement. For instance,
if you have one million dollars invested and you get a reliable 7% ROI, that's
$70,000 per year, less inflation.
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Don't get enticed by
day traders who tell you it's easy to make a quick buck. Buying and selling
dozens of stocks every day is essentially gambling. If you make some bad trades
— which is unbelievably easy to do — you can lose a lot of money. It's
not a good way to get rich.
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Instead, learn to
invest for the long run. Choose good stocks with solid fundamentals and
excellent leadership in industries that are primed for future growth. Then let
your stock sit. Don't do anything with it. Let it weather the ups and downs. If
you invest wisely, you should do very well over time.
Save money for retirement.
Keep saving. It seems that fewer people are
saving adequately for retirement. Some feel they may never be able to retire.
Take advantage of tax-deferred retirement plans such as IRAs and 401Ks. The tax
treatment they embody will help you save faster for retirement.
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Don't put all your
trust in Social Security.
While it's a good bet that Social Security will continue to work for the next
20 or so years, some data suggest that if Congress doesn't radically alter the
system — either by raising taxes or reducing benefits — Social Security won't
be available in its current form. It is probable, however, that Congress will
act to "fix" Social Security. In any event, Social Security was never
designed to be the only resource for retirees in their later years. That makes it
all the more important that you save and invest for the future. [1]
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Invest in a Roth IRA.
A Roth IRA is a retirement account to which working individuals can contribute
an annual sum of $5,500. That money is then invested and gathers compound
interest. If you wait until retirement age to take money out of your
Roth IRA, the money that you withdraw isn't taxed, because it was taxed at the
time you first earned it.
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Contribute to a 401(k)
account. This is an account set up by your employer where pre-taxed
contributions can be invested. Your employer may choose to match all or part of
your contributions. This is probably the closest thing you'll get to "free
money" in your life! Contribute at least enough to take full advantage of
the match.
Invest in real estate.
Relatively stable
assets like rental
properties, or potential development land in a
steadily growing area is a good way to build wealth. As with any investment,
there are no guarantees. Many people, however, have done quite well with real
estate. Such investments are likely to appreciate in value over time. For
example, some people think that an apartment in Manhattan is almost guaranteed
to increase in value over any five-year period.
Invest your time.
For
example, you might like having free time, so you give yourself a few hours a
day to do nothing. But if you were to invest those few hours into getting rich,
you could work towards having 20 years of free time (24 hours a day!) with
early retirement. What can you give up now in exchange for being rich later?
Investment advisor Dave Ramsey likes to tell his radio audience, "Live
like no one else today so that you can live like no one else tomorrow."
Avoid purchases that are likely to depreciate rapidly.
Spending
$50,000 on a car is sometimes considered a waste because it's likely that it
won't be worth half that much in five years, regardless of how much work you
put into it. As soon as you drive a new car off the lot, it depreciates about
20%-25% in value and continues to do so each year you own it. [2]That makes buying a car a very
important financial decision.
Don't spend money on stupid stuff.
It's hard enough making a
living. But it's hard and painful when the things you
spend your hard-earned cash on are financial black holes. Reevaluate the things
you spend money on. Try to figure out whether they are truly "worth
it." Here are some things you probably don't want to spend that much money
on if you plan on becoming rich:
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Casinos and lottery
tickets. The lucky few make money. The rest of us lose it.
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Vices such as cigarettes. Heavy smokers
can only watch their money go up in smoke.
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Huge markups like
candy at the movie theatre or drinks at a club.
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Tanning booths and
plastic surgery. You can get skin cancer for free outside if you'd like. And do
nose jobs and botox injections ever look as good as promised? Learn how to age gracefully! You're not
the only one getting older.
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First-class plane
tickets. What are you getting for that extra $1,000? A hot towel and another 4
inches (10.2 cm) of leg room? Invest that money instead of throwing it
away, and learn to sit with the rest of us!
