Is there a secret to building wealth? Yes and no. Yes, there is a secret that wealthy individuals have used over the centuries. No, there is no secret because the information has been hiding in plain sight.
There are three parts to this secret.
First, you must work hard at a profitable trade. Unless you can offer people genuine value, people will not pay you. Still, it’s not easy to do good work. It takes years of study and practice to get good at anything.
Second, you must keep some of what you earn. If you spend all that you earn, then you won’t be able to save enough to invest.
Third, you must study the fascinating world of investments and risk some of your savings. When you learn how to invest, then your money begins to make money for you. When that happens, you no longer have to trade in your time to generate an income.
There is more to this story, of course, but these are the three kernels that will sprout your wealth tree.
Let’s take a closer look at the third kernel: investments.
How to Begin Investing
There are many ways to invest. The list is endless.
For example:
You could Airbnb stock when it goes public.
You could buy gold bullion and gold coins.
You could buy a residential property.
Once you own assets like stock or precious metals or real estate then you will need to decide on a strategy. Should you sell your stock when the price goes up or hold on to it and earn dividends? Should you buy gold coins and sell them at a higher price or hold on to them because they slowly appreciate in value? Should you buy residential property and then flip it or use it as a source of rental income? When asking what to buy and how to make your asset profitable, there is no right answer. So how do you decide?
Here are two guidelines to help you make money from your investments:
Guideline #1: Don’t Give Away Your Power
It’s easy enough to delegate an asset to someone else, usually a broker, to take care of it for you. Sometimes this works and sometimes it fails miserably.
Although it’s commonly believed that a broker will do their best to help you make money so that they can continue to charge you a fee for managing your account, this logic isn’t always followed.
Sometimes brokerages focus on turnover. This is not a rumor, there have been studies done on how relying on a financial advisor may be less profitable than managing your own account.
They aren’t interested in spending the time to nurture an account. Instead, they just want to make a quick buck from sign up fees and then move on to the next client. This slash-and-burn approach may not be ethical, but it happens more often than people like to think.
Alternatively, a broker may be honest enough, but may not be good at what they do. They may, for example, have too many accounts to keep track of how each client is doing.
For these and other reasons, you must know what you’re doing. You must study the investment market you’re interested in entering and learn the best strategies to grow your income.
If you don’t want to manage your own accounts, then you must research brokerages and only select those with a track record of delivering on their promise. Then, once you’ve signed up for an account with a brokerage, you must understand what they are doing or not doing to help your money grow.
Guideline #2: Don’t believe everything you read
Unfortunately, the best-written piece on the fate of a particular asset may not be accurate. The article or report or summary may be flawed because the writer is trying to sell you something or because the writer has made an error in their research or because their prediction may be wildly inaccurate.
How do you recognize the difference between a good source of information and a dubious one?
You can’t discern what true from what’s false unless you do more research, which could involve reading many other sources and coming up with your own conclusion. Another alternative is to patiently observe market moves and keep track of the author’s rate of successful predictions over time.
So, in the final analysis, what is it that wealthy people know that the less fortunate don’t know? Wealthy people know about the power of earnings and savings and investments. The three secrets behind earning a fortune – producing value generating work, saving a portion of your income, and investing your savings–are only considered a secret because so few people do it.
