Building wealth can be a daunting task for someone young or unfamiliar with the financial industry. To get involved without a good idea what you want can be dangerous for your financial future. However, to not get involved can be far more dangerous for that same future. So here is what you do.
1. Educate yourself
Find out what kind of investing would be the most profitable for you. The most profitable form of investing is always the same for everyone. It's whatever interests you the most. Don't try building wealth based on subjects you find boring. If you seem to find all subjects boring then find a good investment adviser and let him manage your money.
Here are some ideas for investing:
real estate
stock market
bonds
business
When you decide on a subject or multiple subjects then begin educating yourself. Go to the library, rent books, download podcasts, buy books, read everything you can, prepare yourself for any possible situation so you can take advantage of any situation, even situations that seem like problems.
2. Find a good investment adviser
In my opinion this is the most important part of investing. An educated, clever, and honest adviser will prevent you from making even the small mistakes that can cost you hundreds to millions of dollars.
You should make a list of local advisers in your area of interest and set up dates to interview them to advise you and help you manage your assets.
To know you have a good adviser you need to at least know the basics of investing. Don't expect the advisers you meet with to have your best interest in mind. Non-fiduciary advisers don't have the clients best interest at heart. They have a legal contract to put their broker service's interest first, then they will humanly put their interests second, and finally you come in a sad third. A fiduciary is a special, higher, certification that the adviser has the client's best interest at heart. These fiduciaries are the people you want helping you manage your money.
Get ALL of the fees and expenses associated with the adviser. Make sure you understand everything the adviser suggests.
3. Implement The Plan
Set goals that you want. The type of goals you have will dictate what you should invest in and how it should be managed.
Here are some ideas for goals:
growth
income
stability
safety
time span
4. Stick with the plan
Rarely will investing yield you astronomical gains. However, over time it can create HUGE wealth using compounding interest. Compounding interest is nothing to be ignored. To exemplify this I will show you some simple numbers.
$1,000 invested at a very reasonable rate of 8% over 50 years, yields $46,901.61
But.
$1,000 invested at 8% over 100 years, yields $2,199,761.26
You need to put the money in a tax shielded vehicle to capture the full effect of compounding interest. If the money is not in a tax shield vehicle then the interest gains will be reduced by taxes and the gains will take much longer to realize.
The fact is this. If you see these numbers and they don't impress you then move along. But if you do, then you have realized a huge asset. You are the type that can take information and run with it.
Here is a compounding interest calculator so you can do some of your own calculations.
1. Educate yourself
Find out what kind of investing would be the most profitable for you. The most profitable form of investing is always the same for everyone. It's whatever interests you the most. Don't try building wealth based on subjects you find boring. If you seem to find all subjects boring then find a good investment adviser and let him manage your money.
Here are some ideas for investing:
real estate
stock market
bonds
business
When you decide on a subject or multiple subjects then begin educating yourself. Go to the library, rent books, download podcasts, buy books, read everything you can, prepare yourself for any possible situation so you can take advantage of any situation, even situations that seem like problems.
2. Find a good investment adviser
In my opinion this is the most important part of investing. An educated, clever, and honest adviser will prevent you from making even the small mistakes that can cost you hundreds to millions of dollars.
You should make a list of local advisers in your area of interest and set up dates to interview them to advise you and help you manage your assets.
To know you have a good adviser you need to at least know the basics of investing. Don't expect the advisers you meet with to have your best interest in mind. Non-fiduciary advisers don't have the clients best interest at heart. They have a legal contract to put their broker service's interest first, then they will humanly put their interests second, and finally you come in a sad third. A fiduciary is a special, higher, certification that the adviser has the client's best interest at heart. These fiduciaries are the people you want helping you manage your money.
Get ALL of the fees and expenses associated with the adviser. Make sure you understand everything the adviser suggests.
3. Implement The Plan
Set goals that you want. The type of goals you have will dictate what you should invest in and how it should be managed.
Here are some ideas for goals:
growth
income
stability
safety
time span
4. Stick with the plan
Rarely will investing yield you astronomical gains. However, over time it can create HUGE wealth using compounding interest. Compounding interest is nothing to be ignored. To exemplify this I will show you some simple numbers.
$1,000 invested at a very reasonable rate of 8% over 50 years, yields $46,901.61
But.
$1,000 invested at 8% over 100 years, yields $2,199,761.26
You need to put the money in a tax shielded vehicle to capture the full effect of compounding interest. If the money is not in a tax shield vehicle then the interest gains will be reduced by taxes and the gains will take much longer to realize.
The fact is this. If you see these numbers and they don't impress you then move along. But if you do, then you have realized a huge asset. You are the type that can take information and run with it.
Here is a compounding interest calculator so you can do some of your own calculations.
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