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Tips From Millionaires: How To Get Rich Easily

Tips From Millionaires: How To Get Rich Easily

Payday should be a happy occasion, but it sometimes seems that the money is spent before it even hits the bank. Living paycheck to paycheck becomes the norm, and you can never get ahead because you have nothing left after the monthly “bill collectors” get their share. It may seem like it takes luck and the lottery to become rich, but a little knowledge can take you a long way. Take a few tips from a millionaire and watch your money grow.

Make a Budget and Financial Plan

If you want your money to grow, you have to start by developing a smart budget and financial plan. Keep a notebook or a journal detailing your plan and stick to it.   A budget and financial plan can only work if you are willing to take it seriously. Write down your income and then tally up all of your bills to see how much you will have to spend. More importantly make sure that you have enough money to sustain your household. If your bills are larger than your income, you need to make some adjustments.

Before you attempt to invest or funnel your money in other directions, you should always pay your monthly bills. Being in debt keeps you from reaching your full financial potential so cut out any unnecessary spending. Write down any goals that you would like to obtain such as paying off your credit card debt, paying off your student loans or investing in a money market account. With any leftover money make sure that you use it wisely. You can put extra towards paying off debts, or you can invest in an IRA or contribute to a 401K plan.

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Create Multiple Income Sources

Of course bringing in a steady income is important but when it comes to being a millionaire, bringing in multiple streams of income is even more important. Take on an extra part-time job to bring in a little extra. Side jobs such as grass cutting, car washing and even selling on eBay are additional ways to make money. With the way, the job market can sometimes dip it helps to have a backup plan. This tip is especially important if your full-time income is not enough to cover all of your monthly expenses.

Work for yourself. Take the time to start your own business. Start building your empire or brand.   You can start off small. Turn your favorite pastime or hobby into your side hustle. Sell cosmetics online or start your own clothing line out of your home.   Nothing is better than being your own boss. A majority of the people who are in the millionaires club work for themselves. 

Save, Save And Save Some More

When you are first starting off it can seem hard to save but as little as $25 or $50 per month can make a difference. You don’t have to put your money under your mattress to watch it grow. Put it in a savings account that accrues interest and let your money work for you. Build an emergency fund so if you are laid off work or have a family or household emergency you are covered.

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Find small ways to save money. Eat out less, downgrade your cable or tweak your grocery budget so that you can save more. Pay off your credit cards and any other debts so that you can save this money. You should aim to save as much of your income as you can. The more you save, the more you have to invest either back in your own business or in the market. Many millionaires started off small, but their ultimate goal became to save just as much if not more than they spent.

Make It A Rule To Live Below Your Means

Most rich people will probably tell you that one of the biggest mistakes that people make is living above their means. Expensive cars, clothes, jewelry and trips are nice, but they come at a price. Don’t allow your paycheck to control you; control the paycheck. Remember your financial goals and stick to them. Of course, this does not mean that you cannot have nice things, simply focus more on needs than wants.

Do your research and avoid mistakes during the car buying process to ensure that you make the best choice for your budget. You don’t have to get an expensive or flashy car simply because you can afford it. Maybe considering buying used instead of new which can save you even more money. The money you save can be put into savings and take you that much closer to your goal.

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If you are guilty of impulse shopping, avoid malls and boutiques and instead focus on wearing the clothes you have. Cash is king. Though, in an emergency, you may have to use a credit card, you should try to limit their use. If you know that you will not be able to pay it off within a few months, then do not charge it. Think about all the times you have declared in desperation, you have nothing to wear but yet have a walk in closet full of clothes. 

Talk To The Professionals

It is a common misconception that you have to be rich to talk to a financial planner. A financial planner helps you to make smart decisions with your money regardless of whether its one hundred dollars or one million. A financial planner can help to explain about portfolios and investments. They will use their expertise to help you make a decision not make it for you. It is still your job to be involved in the process and know exactly where your money is going. Millionaires often use financial planners to help them manage their money, but they are also often involved in the day-to-day affairs of their finances. So remember to follow the money.

Will you become a millionaire soon just because you follow these steps? No, you may not but you will be armed with all of the tips you need to develop your plan and get the ball rolling. The ball is in your court.

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Featured photo credit: GotCredit via flickr.com

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Published on May 7, 2019

How to Invest for Retirement (The Smart and Stress-Free Way)

How to Invest for Retirement (The Smart and Stress-Free Way)

When it comes to stocks, I bet you feel like you have no idea what you’re doing.

Everyone who’s not a financial expert has been there. I’ve been there. But, time is passing and you need to be crystal clear with how you’re investing for your retirement.

Otherwise, it’s back to work until you can afford not to. So, how can you invest for retirement when you’re not a financial expert?

You take the time to learn the fundamentals well. If you do, you can grow your wealth and retire happy. The best part is that you don’t need to be a financial expert to make smart investment decisions.

Here’s how to invest for retirement the smart and stress-free way:

1. Know Clearly Why You Invest

Odds are you already know why should invest for retirement.

But, maybe you know the wrong reasons. It’s time you get clear on why you’d like to retire. Here are some questions to help you get started:

  • Will you spend more time with your family?
  • What does retirement mean to you?
  • Are you looking to launch that business you’ve been holding off for years?

Everyone wants to retire but not for the same reasons. Once you’re clear for why retirement is important for you, you’ll focus on making it happen.

Investing in the stock market allows you to take advantage of compound interest.[1] All this means is that your money earns money on top of its interest. A reason why investment in the stock market is one of the best ways to plan for retirement.

2. Figure out When to Invest

“The best time to plant a tree was 20 years ago. The second best time is now.”– Chinese Proverb

It’s true if you’d had started investing when you were 10 years old, you’d have a lot more money than you do today.

The reality is that most people don’t start investing until it’s too late. So, if you’re currently waiting for the perfect time to start an investment, it would be today. Open your calendar and block out 2 to 3 hours to choose how you’ll invest for retirement.

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A quick way to get a snapshot of where you stand is to use Personal Capital. Input all your personal information and spend some time setting your retirement goals. Once completed, you’ll know where you stand with your retirement.

Having a savings account for retirement isn’t planning for retirement. Why? Your money loses value when you factor in US inflation.[2]

3. Evaluate Your Risk Tolerance to Create the Perfect Portfolio

Investing your money well depends on your emotions.

Why?

Because when the market drops most people panic and withdraw their money. On average, the US stock market yields an annual 6% to 7% ROI (return on your investment.) But, this won’t happen if you’re worried about short-term loses.

Before you invest your next dollar, know your risk tolerance.[3] Your risk tolerance determines the number of risky and safe investments you’d have.

Regardless of your investing style, you need to view investing for retirement as a long term game. Know that some years you’ll lose money but recoup this in the long-term.

Avoid watching market-related new. Also, create a double authentication to log in your investment account. This way you’re less likely to withdraw your money.

4. Open a Reliable Retirement Account

Depending on your circumstance, you may need to open a new brokerage account. This is the account is where you’ll invest your money.

If you’re currently working for a company, odds are that they offer a 410K investing account. If so, here’s where you’ll invest most of your money. The only problem with this is that you’re limited to the stock options that are available.

You do have the option to open a separate IRA (individual retirement account.) Here are some of the best brokers:

  1. Vanguard
  2. TD Ameritrade
  3. Charles Schwab

5. Challenge Yourself to Invest Consistently

Committing to invest for retirement is hard, but continuing to do so is harder.

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Once you’ve started investment for your retirement, you run at risk from stopping. Often you’ll want to contribute less, so you’d have more money in your pocket.

That’s why it’s important that you create a budget that allows you to invest each month. If you’re working for a company, you can set a percentage for the amount you’d like to contribute each month. Most people by default contribute 1% but aim to contribute 10% to 15%.

Be the judge for how much you can afford to contribute after covering important expenses. To stay motivated, use Personal Capital to view your net worth.

A benefit to contributing money to your retirement account is not taxed. For example, if you earn $100 and invest 10%, you’d contribute $10, then get taxed on the remaining $90. As of 2019, the most you’re able to contribute towards your 401K is 19K but this can change.

6. Consider Where to Invest Your Money

The most common way to invest your money is in stocks, but it’s not the only way. Here are other ways to invest:

Robo Advisors

Robo-advisors[4] are fancy algorithms that’ll choose the best investments for you. Sites like Wealthfront make it easy for first-time investors to invest their money. You’d input information about yourself and set your risk tolerance.

Then, set your monthly contribution amount and your robo-advisor would do the rest. Robo-advisors charge a fee to manage your money, but less than regular advisors.

Bonds

Think of bonds as “IOUs” to whomever you buy them from.

Essentially, you’re lending money and charging interest. Like stocks, not all bonds are equal. Some will be riskier than others depending on their rating.

Here are the different types of bond categories:[5]

  1. Treasury bonds
  2. Government bonds
  3. Corporate bonds
  4. Foreign bonds
  5. Mortgage-backed bonds
  6. Municipal bonds

Mutual Funds

Picture a group of people dumping all their money in a jar that’s managed by a professional. This is how mutual funds work. The fund manager manages the money looking to earn capital gains (interest.)

One of the best types of mutual funds is index funds. Since these funds don’t try to beat the market and instead follow it, they need less research. Because of this they often charge the lowest fees and yield the best long-term results.

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Real Estate

Yes, buying a home is an investment when done correctly.

Imagine buying a home and using it as a rental property. After repairing it, you receive a monthly surplus check of $100 to $200.

This may not sound like a lot, but repeat this process enough times and you’d earn a large amount of passive income. That’s why real estate is one of the best investments to not only retire but become wealthy.

But, it requires a lot of money to start and you should expect losing money along the way as you learn the process.

Savings Accounts

Your money can still grow in a savings account. Nowadays most online banks offer a 2% annual return. Although the average inflation is higher your money will be available when you need it.

7. Master Disincline to Dodge Short Success

Investing for retirement is a long-term strategy. That’s why you need to master delayed gratification. All this means is delaying short-term pleasure for something bigger in the future. Research shows that those who have delayed gratification are more successful.[6]

So how can you master delayed gratification?

By building your discipline.

Think back to what retirement means to you. A clear purpose will help you avoid withdrawing your money during a market downturn. It’ll help you contribute more towards retirement when you’d want to waste it instead.

Your journey towards retirement will be long, so reward yourself along the way. Choose a reward that’s relevant and meaningful, so that you reinforce positive behavior. For example, after contributing more towards retirement, treat yourself to dinner.

8. Aggressively Invest on This One Investment

I’ve mentioned several types of investments but haven’t covered the most important one.

It sounds cliche but here’s why you’re your best investment towards retirement. The more you know, the more money you’ll be able to make. The more good habits you adopt, the more secure your retirement will be.

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More importantly, investing in yourself is an investment that no one can take away. There’s no market downturn nor tragic circumstance that’ll wipe your knowledge and experience.

But, how can you invest yourself?

Reading books, blogs, and anything that’ll help you learn new topics daily. Listen to podcasts and audiobooks on your commute to/from work.

Save money to buy courses and hire coaches. I used to believe hiring coaches was a waste of money when I could learn the subject alone.

But, coaches see your blind spots and hold you accountable. Hiring the right coach will help you achieve your goals faster than you would’ve alone.

Retire Happy with Excess Money

The key to a secure financial future doesn’t only belong to financial experts.

It’s possible for you and I. What if you were able to retire earlier than most people and weren’t a financial planner? What if you were able to focus on what you enjoy doing the most while your money was working hard for you?

I know this sounds impossible now, but the truth is you’re capable of taking charge of your retirement. I’m not a financial expert but I’ve learned how to invest my money by reading books and learning from others.

Investing your money is scary. So start small and invest a small amount of your money with a robo-advisor. Feel your money drop and rise for a month or two. Then, invest more and keep this up until you’re aggressively saving for retirement.

One day, you’ll wake up with a net worth you’re proud of – confident about your retirement. You now know a few strategies you can use to invest in your retirement. Will you take action to retire happy?

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Featured photo credit: Matthew Bennett via unsplash.com

Reference

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