The simple Steps:
- Make a good portion of money: The first step is making enough money to meet you financial needs and have some left over.
- Save enough: With this leftover money, you will need to develop a well thought out saving’s plan.
- Research: The third step is one of the most vital steps. This will dictate how much you will grow your wealth; you must conduct heavy research into investment’s you could make.
- Invest it: Once, your research is complete you will need to invest.
Step 1: Make a Good Portion of Money
This step is where it all begins; you need to have a source of income that exceeds your financial needs. It does not have to be a huge amount either; it just has to be a little extra. There are many ways to make money, but most people don’t make enough or a lot of money.
If you fit into the category of, “not making enough money” I have a tip for you. Surprisingly enough! You most likely do make enough money; to have a little extra cash at the end of the month. It may seem like you don’t have enough money because of your current way of living, but you can drastically save more money by making minor or even major changes to your life. This could include downsizing your house to buying cheaper brands. Remember, you can’t earn without sacrifice. Chances are if you make minor tweaks to your life you will have enough money to save and later in the future, you will be in a way better position than you are right now.
Those of you who don’t yet have a job or career may want to check out the pointers below on how you can choose what job or career best fits your personal needs:
- Find out what you enjoy. You’re more likely to succeed if you’re doing something enjoyable because you will have a positive attitude and work hard.
- Look at what you are good at. Asses how you can use the skills you have to create a sustainable income.
- Research jobs or careers that will pay well. An enjoyable job that pays horribly will not stay enjoyable in the future.
- Find out how you can get into your chosen career or job. Work like mad to reach the requirements and get any education that is needed.
If you already have a career or job that you hate doing I suggest that you change it because it will, just deplete your energy over time. The only reason you want wealth in the first place is to create a better life for yourself. And all a better life encompasses is a bunch of good feelings toward life. So don’t be worried that your starting over because by changing to a career or job you enjoy, you’re most likely unconsciously meeting the needs you believe money will provide for you.
Step 2: Save That Money
Time to save! Now that you have a good source of income you need to set up a plan to save a certain amount per month and still live comfortably off you income. If your one of the few that is already doing this than great on you! You’re the lucky one that gets to skip to step three, research.
If you make enough money, living well but still not saving, you have a common issue. What’s the issue? You want more than your budget has to offer. Good thing about this, it’s easy to fix. All you need is to change your habits and thought patterns or if you don’t even have a budget; create one. To get a budget up and running read the steps below:
- Set Some Goals: What do you want to achieve? Every goal you set should be specific, measurable, relevant, time-framed and achievable. To remember this you can just use the word SMART. Your collection of goals should include short term, midterm and long term goals.
- Find your sources of Income: Record all your sources of income and the amount that each produces per month.
- Analyze where your money is going: Do you keep records of your purchases? Or keep receipts? You should be! Before you can manage your money you must know where it’s going. Make a habit of recording everything you buy each day. It may be a hassle but it will be worth it.
- Compare income to expenses: It’s a good sign if you can subtract your expenses from your income and have something left over. On the other hand, if you have nothing left over or your expenses exceed your income, you will need to make some changes. Even if you have a surplus of money left over you should do this next step, being deeply looking through your expenses and spotting where you are catering too much to your wants. When you have spotted these areas, set a limit on how much you can spend.
Step 3: Lots of Research
“What we find changes who we become.” – Peter Morville. The scale at which we research changes how much we can accomplish. If you take anything out of this post take the word research, it will be the most use in life. First off, research will improve the integrity of whatever you’re studying. Secondly, it will really help you in your decision making. Without research you could miss out on huge opportunities in life because you lack decisions. On top of this research develops credibility, you base your opinions and thoughts with facts. Not just on what someone else has said or how you emotionally feel about the topic; you truly know.
This all comes into play in the next step, investing. The more you research companies, the stock market, how to make smart investment choices and countless other stuff your chances of picking the right investment increases by a lot. Having the research to back your decisions in investing is huge, without it you would have to pay someone to choose investments for you. There are countless hidden fees too if your purchasing securities through your financial institution so I advise doing the research to save vast sums of money in the long run.
Step 4:Time To Invest
Many people shy away from investing for various reasons. One reason, being people think you have to be rich to make a profit off investments. This is far from the truth though. You may not get rich but you can definitely make a profit. There are options out there where you can invest less than one hundred dollars per month. Another obvious reason for the fear of investing is people don’t want to lose their money. They think of investing as gambling. This comes from a common misconception of what an investor is. People are thinking of stock traders or people who hold stocks for short periods of time as investors. The term I like to use for people investing like this is, “speculator”. They are just guessing the market like you guess in a game. They never truly know.
If you invest for the long run and diversify however you minimize a lot of the risk and it’s not a game of gambling but game of patience. Lastly, people just don’t want to put the effort in to actually make money from their investments and it truly does take effort and time.
Forms of Investment to Consider:
- Bonds (Fixed Income Security): A security founded on debt. Bonds are very low risk; however they also have very low potential return.
- Stocks: When you purchase a stock you are buying a portion of a company. You receive the right to vote and share in the profits. These profits are known as Stocks provide higher potential return on your money than bonds but are much riskier and there worth fluctuates daily.
- Mutual Funds: Collection of stocks and bonds. When you buy a mutual fund you are pooling your money together with others. Mutual funds save a lot of time and don’t require much experience.
- Options: An option is a contract granting a buyer the right to buy or sell an underlying asset at a specific price on or before a certain date.
- Future: Contract obligating a buyer to purchase an asset at predetermined time and price. Unlike an option you must pay or sell the asset by the deadline.
- Real Estate: Purchase, ownership, management, rental and sale of real estate for profit. There are many tax incentives for real estate. Also real estate reacts proportionally to inflation, you can leverage funds.
- Gold: Gold acts as a safe investment since there will always be a demand for it.
- Certificates of Deposit (CDs): Like a savings account but offer a specific fixed-term interest rate. The benefit about these is there virtually risk free.
To get started investing, first know what your goals are. Do you want to pay off debt? Pay for your education? Improve your quality of life? Research each of the forms of investment above and choose which ever makes the most sense with the amount of time and funds you have. If you purchase stocks you will want to hold them for ten years or longer. Your stocks risk will reduce the longer you hold them as well as potential growth will be more likely to occur.
For further information visit these sights:
- http://www.investopedia.com/ (All sorts of great investing information)
- http://www.morningstar.com/stocks.html (Stock information)
- https://www.thestreet.com/ (Investing Articles)