Trick to Finding Wealth
Financial tips for entrepreneurs setting out on their own
Posted December 21st 2017
By: Terence Paulauskis, Redbridge Financial
We’ve all observed our fair share of people who have had financial success and others who were not so successful. What lessons can they teach us? What is still a financial reality, and what is a myth in today’s world?
Here are four financial tips that can apply to anyone, including entrepreneurs setting out on their own.
- There are only six ways to accumulate wealth:
The riskiest thing you can do is take no risk.
Whether it’s money, love, or just life in general, you have to take risks if you want returns. When it comes to money, taking risks means investing in things that can go down in value, like stocks, real estate or your own business.
Can you get through life without taking risks? Sure, but remember the old adage: you’ll never get a hit from the dugout. The same can be true with investments.
Think about it: If you invest $200 a month at 2 percent for 30 years, you would end up with a little less than $100,000. If you earn 10 percent on the same investment, you would have over $450,000.
Take measured risks. Minimize risk by knowing as much as possible before investing, not putting all your eggs in one basket.
When it comes to information, less can be more.
Did you know that if you had invested $2,000 into Apple stock 15 years ago, today it would be worth about $300,000?
If you watch financial news all day, react to all the pundits and market news, you likely sold it long ago.
To achieve wealth, you must buy into high quality investments and, in some cases, hold on to them for long periods of time.
Time isn’t money; money is time.
We often hear people say that time is money. But, when it comes to smart financial planning, I disagree. Because if you lose money, you can get it back. However, time is the one nonrenewable resource you have.
The trick is to spend as much of your limited time as possible doing stuff you want to do rather than working for other people doing stuff you have to do. Money is the resource that allows you to do this.
If you go shopping and spend $400, that’s $400 you could have invested. If you had earned 10 percent on that $400, in 30 years you would have accumulated about $8,000. Ignoring inflation and assuming you could live on $4,000 a month, it means two more months of retirement!
- 1. Marry money;
2. Inherit money;
3. Exploit a unique talent;
4. Get exceedingly lucky;
5. Own or lead a successful business; and,
6. Spend less than you make and invest your savings over long periods of time.
Maybe you are aiming for one of the first five. However, even when times are tight or business is soaring, practice the last one and you will already be on your way to accumulating wealth.
Of course, successfully building wealth requires a plan – and sticking to it. That’s where financial advisors come into play. Working with an advisor who will meet with you at least yearly to filter out the noise from the financial world and help you stick to your plan.
Sure, there will be things you truly need to buy, but maybe you don’t need $400 worth. It’s your choice: expensive stuff today or free time tomorrow.
This is written by a member of the Central Michigan University Research Corporation community; however, the thoughts expressed in this blog post are the views of the writer, not necessarily CMURC.