Most Wealthy People Start Out Poor

  • Added:
    Nov 22, 2012
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    1103
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Wealth building is for everybody, not just the wealthy. In fact, many of those we think of as reasonably wealthy started out pretty modestly. They made a plan for the long term and stuck to it, and that's what you should do.

Here are a few wealth building basics.
 
You're never too young to start.

Even if you have just a small amount to invest, get into the habit of investing every month. Compound interest is very much your friend.

 
Enroll in your 401k

This is a no brainer, your employer is giving you free money, and the government is allowing you to invest dollars before they're taxed - go for it!

Don't try to be clever
 
Invest in two or three mutual funds which give you a broad exposure to a variety of diversified markets. You are unlikely to be able to outperform a mutual fund on your own when you are busy making a living, so why try?

Don't switch around

You're in this for the long term, chasing the market is expensive and can end in disaster. Conservative and sensible and above all in it for the whole distance, should be your watchwords.

Make saving automatic

Set up standing orders from your bank account into the highest yield savings accounts you can find – after you have maxed out your 401k contributions. If you get a pay rise, try to save it all for as long as possible – after all, you were doing without it last month, you can do without it this month too.

Check on fees
 
Some mutual funds can be pretty greedy on fees, make sure you find ones that aren't.  Switching and selling ar expensive hobbies too, try to minimize this kind of activity.
 
Credit card debt is bad

Credit card debt is amongst the most expensive you can get, either pay your cards of each month, or if you can't do that, ditch them. Don't rush to pay off low interest debt like student loans fast; if you have spare money, stuff it into your 401k

This may sound like boring stuff, but you'll be glad you followed this advice in years to come.  Despite global crashes, if you believe that capitalism is going to be around for a long time to come, then this is still a good route to take.

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John Martin enjoys writing articles for InterestingArticles.com. View the John Martin Author Profile


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