You'll never get rich unless you understand some fundamentals about saving, spending, and investing. Rule number one, pay yourself first. Tithe or give 10% of your gross income to yourself. Set up a savings program and for every dollar you earn, give yourself 10 cents. Rule Two: Spend less than you earn, use credit cards carefully, and try to pay them off every month.
Rule Three: Start investing when you have a savings set aside for emergencies, and get yourself an investment broker or if not read and study before you invest. The single most important factor in wealth-building is the size of your investible income. Investible income is what you have left over each month after you've taken care of your lifestyle expenses. Stock investing (or even bond investing) is an inadequate strategy for building wealth. It won't get you rich or make you wealthy, however much you wish it would.
Even Warren Buffett, the world's most successful investor, knows this. His wealth has come not from being an individual investor but from being the principal of Berkshire Hathaway. Keep that thought in mind every time you hear his name quoted.
Your home is one of the biggest investments you can make, try to buy a home at the top of your budget limit and then stay in the same home as long as you can. The single most important factor in avoiding the spending spiral that kills wealth is to stay in the house you have now. Nobody else that I know of has made this simple point. But I can tell you that it is true.
The No. 1 strategy is acquiring equity in a start-up business. There are many ways to do this. The most commonly talked-about ways are downright foolish. But there are smart ways to do this, even if you are a novice to business.
Investing in rental real estate is unique – it stands halfway between active income and passive income. Next to entrepreneurship, it provides the highest return you can get from any financial endeavor.
The biggest mistake retirees make is giving up their active incomes. I know that this is exactly what you hope to do some day. But I'm warning you, it's a big mistake.
If you are already retired, you are probably hoping you can replace that income with passive investment strategies. I'm here to tell you that they won't work.
To keep your wealth for a lifetime, you need multiple streams of passive income. Your goal should be to build each stream of income to a level at which you can live on that and that alone.
Do these statements make sense to you? If so, how are you doing?