Everyone can get rich, it just depends on your own personal definition of wealth. If you want to build wealth, you must learn the basics of saving and investing. Most wealthy people inherited their wealth or worked hard to accumulate it. If you are one of those who will inherit or inherit your wealth, this article is not for you. But if you’re like most of us, read on and learn how to build your own private wealth and enjoy financial independence.
Follow the outline below and the wealth building process will begin. For most people, it doesn’t happen overnight, but it can happen easily over time. Surprisingly, the more wealth you create, the easier it is to create more wealth. Using a company 401K plan is a great way to build wealth, plus tax exemption and you can even get a matching contribution from the company. Always start with these programs first and then move on to your personal investment program.
Definition of wealth: For some, the definition is having more money than they know what to do with. For most, it can be defined as: “Do what you want, when you want, with friends and family … and life is affordable, while work is optional.” If you can imagine this lifestyle, you would probably agree that this would make you a wealthy individual. What it takes to achieve this goal is different for everyone who imagines it. It depends on your location, your desired spending habits, your genetic longevity, and many other factors. But to achieve this, you need a plan, and each of the following components can help.
Investment program: Almost all wealthy people will agree that you need to have a solid investment program if you plan to have sustainable wealth. If you can generate enough investment income to maintain your desired lifestyle, the job becomes optional. Building a balanced and diversified portfolio with a proper asset allocation strategy keeps things running smoothly. But how do you get there?
Accumulation program: Your first step is to develop a strategic accumulation plan. It is always best to start early in life and start small. There is a learning curve that you can only master with experience. No-load mutual funds are a great way to start. They have a low initial investment, are widely diversified, offer liquidity, equity exposure and professional management. You can start with as little as $ 100 and add whenever you want.
Systematic program: Your next step should be to figure out how much you can invest each year. Then divide that number into a weekly, monthly, or even daily figure that you can start to put into practice. When you break down the numbers into a daily figure, you can even find ways to save more. Forgoing $ 3.00 Starbucks coffee can save you up to $ 1,000 each year. That $ 8.00 pack of cigarettes each day could save you nearly $ 3,000 a year. Small changes can have a big impact on your wealth expansion efforts.
Once you’ve determined your desired annual accrual goal, it’s time to consistently put those dollars into your chosen investments and let them begin to build your wealth.
Automatic program: The biggest problem most people have once they figure out how much to accumulate is finding the discipline to set aside those dollars each week or month to make it happen. There are several great ways to do this. Ask your employer if they will allow you to set up a payroll deduction directly into your brokerage or mutual fund account. Most large corporations will, and many small businesses will, too.
Otherwise, set up an automatic monthly electronic transfer from your checking or savings account directly to your brokerage or mutual fund account. This can be done directly with your fund company or broker and any bank that participates in the EFT (Electronic Funds Transfer) network, which almost all banks do. Once you start saving, you will be able to see a regular and substantial improvement in your net worth and wealth creation.
Summary: Any successful wealth building program requires discipline, planning, and in many cases decisions to make small sacrifices to achieve the bigger goal. One of the most important factors common to all wealthy people is that they have they found ways to live comfortably below their means and then invested the rest. Please read this statement again. If you can find a way to do this, you will become rich and enjoy a financially and emotionally rewarding life.