Are looking for a get rich quick scheme? Bad news, your on the wrong blog.
However, if you are wanting to develop true wealth, accept realistic time-frames and have a long term vision for your finances, then you are on the right blog.
Let me start with a proven fact: True wealth is developed over a long period of time, diversification, owning the world (global shares) and by using the long term compound effect. But please remember, you need time, you need patience, you need discipline and you MUST leave your investments alone (in order to grow). These are the basic necessities if you are looking to generate wealth.
"Compound Interest is the eighth wonder of the world. He who understands it, earns it. He who doesn't...pays it." -Albert Einstein.
5 ways to diversify and compound:
Fixed Investments - Typically on a 12, 24 or 36 month term at an agreed rate or return, e.g 1% per calendar month. Lower Risk - Long Term
Stocks and Shares - Ownership in companies across the globe. Shares have monetary value and can be liquid at any point. The rate of return varies depending on the current state of the market, rise or fall. Low, Medium and High Risk - Medium to Long Term.
Fixed ISA - Higher rate savings kept within a bank, which typically offer fixed 1 or 2 year rates at 1.41% to 1.61% fixed (subject to changes) The rate is slightly higher than a standard savings account, as the bank uses these funds to lend to borrowers, therefore returning a better rate than a standard savings/current account. Low Risk - Long Term
Cash - In physical or within a bank. This is a safe and very liquid way to build up cash, however the rate of return is minimal because of the maximum security offered on these funds. Very Low Risk - Medium to Long Term
Property - Owning property is one of the most proven ways in developing true wealth. From rental income and property value increasing year after year, this is one of the most hands off compounding effects available. With property prices doubling on average every 10 years, this is a fantastic automated compounding method, which only requires you to maintain and manage throughout the ownership. Medium Risk - Long term.
Someone is sitting in the shade today, because someone planted a tree a long time ago. -Warren Buffet
5 quick tips when investing:
Invest in what you know - If you do not understand it, do not invest into it. Gains are made when you know, understand and feel comfortable in your investment choice. "Please avoid Get Rich Quick Schemes" If it feels to good to be true, it normally is.
Look Long Term - Wealth and success RARELY happen over night, yes there are examples however these are so far and few, it is just not realistic for the majority seeking wealth. Long term blueprints are available for research: Warren Buffet, Jeff Bezos, Bill Gates and Steve Jobs just to name a few, all became billionaires from the compound effect built over years, through smart investing and business. Replace your 2 to 3 year financial goals and look towards the 10 - 20 year mark! Lets begin investing for financial future stability, for you and your family.
Diversify - Diversifying your investment portfolio is a great way of reducing risk and the possibility of loosing money. But beware that diversifying too heavily can strip away potential return on investment that you may have enjoyed. Reasonably diversifying your investment portfolio eliminates some of the turbulence and makes for more consistent returns in your investment portfolio.
Begin reducing outgoings and increase on savings - Question yourself, what am I spending money on, which quite frankly I do not need to buy? Do not try to convince yourself you do not have that one unnecessary spending habit...we ALL do! Lets now replace that spending habit for either additional savings or investing.
Set Investment goals/targets - An important step when investing is setting your goals. What yearly return are you looking for? What sum of money do you want in the bank within the next 10-15 years? Are you wanting to leave your children a pot of money for when their older? We all have our different reasons why we want to invest and the knowing is the driving force behind doing it. Make you WHY big enough so you commit to generating serious long term wealth.
Quotes:
Without risk there is no reward!
If you don't risk anything you risk everything!
If you are not willing to risk the unusual, you will have to settle for the ordinary!
Life is inherently risky. There is only one big risk you should avoid at all costs, and that is the risk of doing nothing!
It is better to risk starving to death then surrender. If you give up on your dreams, what’s left?
Investment Audio Recommendations:
How to own the world - Andrew Craig.
Rich Dad's Cashflow Quadrant - Robert Kiyosaki
Principles - Ray Dalio
The Most Important Thing - Howard Marks
I hope you have enjoyed this blog.
Aaron Knightley.
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