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Eight Investing Rules You Need To Follow To Make You Rich

Eight Investing Rules You Need To Follow To Make You Rich

Investing is like training for a marathon. Both require discipline, focus, determination, balancing risk and safety, and long-term vision. These investing rules have been tested and proven effective by generations of investors. Many people from every kind of background have followed these investing rules to wealth … which means that you can, too.

1. Start early and invest regularly

Start early

Warren Buffet once said, “If, when making a stock investment, you’re not considering holding it at least ten years, don’t waste more than ten minutes considering it.” Think of investing as training for a marathon. If you’re a couch potato, you can’t start running the week before the race and expect to win. Not only will it take a while to get in shape; you’ll need to be able to weather some injuries, illnesses, and other setbacks before race day.

Keep in mind that the longer you invest, the more you take advantage of compounding interest, and the more money you make long term. If you like numbers, just for fun, pull out a spreadsheet or calculator and start tinkering with the Rule of 72, which states that if you divide 72 by the annual rate of return, you get the number of years it will take for your investment to double in value.

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Invest regularly

If you want to run a marathon, you can’t just go out there and run a few miles once in a while and expect to see much improvement. Regular training, and regular investing, is key. If you try to do all of your marathon training at once, you’re almost guaranteed to injure yourself, and the same thing can happen if you dump a whole lot of money into one bad investment.

One nice aside about this investing rule is that you can take advantage of some nifty tax breaks every year by showing the IRS that you’re making regular contributions to an IRA or other retirement fund.

2. Choose your asset allocation — your marathon training program

Asset allocation” is the process of deciding what kinds of investments you want to make. Different investments behave differently and yield different amounts of money in the short- and long-term, and — just like marathon training — there is no one-size-fits-all investment strategy for everybody. Finding a balance between risks and rewards is a moving target that depends on a lot of variables.

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There are three traditional asset classes: equities (stocks), fixed-income (bonds), and cash and equivalents (savings accounts, certificates of deposit, money market funds). Stocks have historically yielded the highest returns for the greatest risk of the three asset classes. They’re the sprints of the marathon training world: they’re going to increase your strength and stamina the most, but will also put you at the highest risk of injury. Bonds are the middle-ground investments. They’re like tempo and other lower-intensity interval training; lower risk of injury, but also more modest benefits. Cash and cash equivalents are your steady-state running sessions and endurance miles. You’re not too likely to hurt yourself — or lose money — but they’re also going to yield the smallest returns for your effort.

3. Rebalance yearly

Rebalancing is the practice of periodically evaluating your portfolio — your “training program” — and making any tweaks to the balance between high- and low-risk investments. You could rebalance more often, but the consensus seems to say that a year gives you long enough to see how everything is doing over a longer period of time. Plus, it gives you a regular date to write in your calendar. ‘Nuff said.

4. Keep costs down

“The goal of the nonprofessional should not be to pick winners … the ‘know-nothing’ investor who both diversifies and keeps his costs minimal is virtually certain to get satisfactory results.” — Warren Buffett

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This is actually a pretty simple concept. The less you’re paying in “overhead” — fees, taxes, or heavy shoes — the more of your money (or energy) you get to keep and reinvest. Also, lower-cost investments tend to perform better than their higher-cost brothers and sisters. You don’t see too many marathoners wearing combat boots. Which brings me to the next point:

5. Make index funds the core of your portfolio

Index funds are a type of mutual fund that is built to mimic the performance of a market index such as the S&P 500. One of the features of an index fund is — you guessed it — low cost. In addition, index funds are intrinsically diverse. They include a range of high-risk and low-risk investments, all put together by professional folks who know what they’re doing and have already done all of the hard work and research for you. That’s pretty hard to beat.

6. Focus on your goal, which is to make money

Remember, this is not casual running; you’re training for a marathon. You’re not just playing with your money; you’re moving toward riches. As tempting as it might be to invest in the latest bright-and-shiny, new moneymaking concept, or to tinker with new and cool marathon training theories, if you’re just starting out, you’re better off following the investment rules set down by the generations of investors and experts who have already made the mistakes, done the research, and come up with strategies that work. After you have a nice cushion of money or a few marathons under your belt, it’s probably fine to do a little experimenting, but until then, keep it safe.

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7. Don’t try to outperform the market

This is one of my favorite investing rules. If you’re running or investing at all, you’re already ahead of 99% of the population, so relax and don’t try to outfox the market. You can’t run any faster than you can … and you can’t force your investments to perform any better than they can.

8. Don’t spend your principal

This is probably the most obvious of all of the investing rules, but once you’ve invested your money, keep your hands off of it. Spending your investment is like skipping training. You aren’t going to get ready for that marathon if you don’t run, and your money isn’t going to gather interest if you spend it on anything besides your investments.

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Published on November 8, 2018

How to Answer the Tough Question: What are Your Salary Requirements?

How to Answer the Tough Question: What are Your Salary Requirements?

After a few months of hard work and dozens of phone calls later, you finally land a job opportunity.

But then, you’re asked about your salary requirements and your mind goes blank. So, you offer a lower salary believing this will increase your odds at getting hired.

Unfortunately, this is the wrong approach.

Your salary requirements can make or break your odds at getting hired. But only if you’re not prepared.

Ask for a salary too high with no room for negotiation and your potential employer will not be able to afford you. Aim too low and employers will perceive as you offering low value. The trick is to aim as high as possible while keeping both parties feel happy.

Of course, you can’t command a high price without bringing value.

The good news is that learning how to be a high-value employee is possible. You have to work on the right tasks to grow in the right areas. Here are a few tactics to negotiate your salary requirements with confidence.

1. Hack time to accomplish more than most

Do you want to get paid well for your hard work? Of course you do. I hate to break it to you, but so do most people.

With so much competition, this won’t be an easy task to achieve. That’s why you need to become a pro at time management.

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Do you know how much free time you have? Not the free time during your lunch break or after you’ve finished working at your day job. Rather, the free time when you’re looking at your phone or watching your favorite TV show.

Data from 2017 shows that Americans spend roughly 3 hours watching TV. This is time poorly spent if you’re not happy with your current lifestyle. Instead, focus on working on your goals whenever you have free time.

For example, if your commute to/from work is 1 hour, listen to an educational Podcast. If your lunch break is 30 minutes, read for 10 to 15 minutes. And if you have a busy life with only 30–60 minutes to spare after work, use this time to work on your personal goals.

Create a morning routine that will set you up for success every day. Start waking up 1 to 2 hours earlier to have more time to work on your most important tasks. Use tools like ATracker to break down which activities you’re spending the most time in.

It won’t be easy to analyze your entire day, so set boundaries. For example, if you have 4 hours of free time each day, spend at least 2 of these hours working on important tasks.

2. Set your own boundaries

Having a successful career isn’t always about the money. According to Gallup, about 70% of employees aren’t satisfied with their current jobs.[1]

Earning more money isn’t a bad thing, but choosing a higher salary over the traits that are the most important to you is. For example, if you enjoy spending time with your family, reject job offers requiring a lot of travel.

Here are some important traits to consider:

  • Work and life balance – The last thing you’d want is a job that forces you to work 60+ hours each week. Unless this is the type of environment you’d want. Understand how your potential employer emphasizes work/life balance.
  • Self-development opportunities – Having the option to grow within your company is important. Once you learn how to do your tasks well, you’ll start becoming less engaged. Choose a company that encourages employee growth.
  • Company culture – The stereotypical cubicle job where one feels miserable doesn’t have to be your fate. Not all companies are equal in culture. Take, for example, Google, who invests heavily in keeping their employees happy.[2]

These are some of the most important traits to look for in a company, but there are others. Make it your mission to rank which traits are important to you. This way you’ll stop applying to the wrong companies and stay focused on what matters to you more.

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3. Continuously invest in yourself

Investing in yourself is the best investment you can make. Cliche I know, but true nonetheless.

You’ll grow as a person and gain confidence with the value you’ll be able to bring to others. Investing in yourself doesn’t have to be expensive. For example, you can read books to expand your knowledge in different fields.

Don’t get stuck into the habit of reading without a purpose. Instead, choose books that will help you expand in a field you’re looking to grow. At the same time, don’t limit yourself to reading books in one subject–create a healthy balance.

Podcasts are also a great medium to learn new subjects from experts in different fields. The best part is they’re free and you can consume them on your commute to/from work.

Paid education makes sense if you have little to no debt. If you decide to go back to school, be sure to apply for scholarships and grants to have the least amount of debt. Regardless of which route you take to make it a habit to grow every day.

It won’t be easy, but this will work to your advantage. Most people won’t spend most of their free time investing in themselves. This will allow you to grow faster than most, and stand out from your competition.

4. Document the value you bring

Resumes are a common way companies filter employees through the hiring process. Here’s the big secret: It’s not the only way you can showcase your skills.

To request for a higher salary than most, you have to do what most are unwilling to do. Since you’re already investing in yourself, make it a habit to showcase your skills online.

A great way to do this is to create your own website. Pick your first and last name as your domain name. If this domain is already taken, get creative and choose one that makes sense.

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Here are some ideas:

  • joesmith.com
  • joeasmith.com
  • joesmithprojects.com

Nowadays, building a website is easy. Once you have your website setup, begin producing content. For example, if you a developer you can post the applications you’re building.

During your interviews, you’ll have an online reference to showcase your accomplishments. You can use your accomplishments to justify your salary requirements. Since most people don’t do this, you’ll have a higher chance of employers accepting your offer

5. Hide your salary requirements

Avoid giving you salary requirements early in the interview process.

But if you get asked early, deflect this question in a non-defensive manner. Explain to the employer that you’d like to understand your role better first. They’ll most likely agree with you; but if they don’t, give them a range.

The truth is great employers are more concerned about your skills and the value you bring to the company. They understand that a great employee is an investment, able to earn them more than their salary.

Remember that a job interview isn’t only for the employer, it’s also for you. If the employer is more interested in your salary requirements, this may not be a good sign. Use this question to gauge if the company you’re interviewing is worth working for.

6. Do just enough research

Research average salary compensation in your industry, then wing it.

Use tools like Glassdoor to research the average salary compensation for your industry. Then leverage LinkedIn’s company data that’s provided with its Pro membership. You can view a company’s employee growth and the total number of job openings.

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Use this information to make informed decisions when deciding on your salary requirements. But don’t limit yourself to the average salary range. Companies will usually pay you more for the value you have.

Big companies will often pay more than smaller ones.[3] Whatever your desired salary amount is, always ask for a higher amount. Employers will often reject your initial offer. In fact, offer a salary range that’ll give you and your employer enough room to negotiate.

7. Get compensated by your value

Asking for the salary you deserve is an art. On one end, you have to constantly invest in yourself to offer massive value. But this isn’t enough. You also have to become a great negotiator.

Imagine requesting a high salary and because you bring a lot of value, employers are willing to pay you this. Wouldn’t this be amazing?

Most settle for average because they’re not confident with what they have to offer. Most don’t invest in themselves because they’re not dedicated enough. But not you.

You know you deserve to get paid well, and you’re willing to put in the work. Yet, you won’t sacrifice your most important values over a higher salary.

The bottom line

You’ve got what it takes to succeed in your career. Invest in yourself, learn how to negotiate, and do research. The next time you’re asked about your salary requirements, you won’t fumble.

You’ll showcase your skills with confidence and get the salary you deserve. What’s holding you back now?

Featured photo credit: LinkedIn Sales Navigator via unsplash.com

Reference

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