9 Powerful Ways to Create Wealth
With a tumultuous week behind us in the stock market, both in America and overseas, many investors are wondering how to preserve and create wealth. Despite the recessionary fears and uncertainty that are plaguing the rollercoaster performance of the market, the nine underlying principles to long-term wealth creation remain the same:
- Create Clear, Defined Objectives: Before you begin on any investment plan, you must be clear on your goals and objectives. Are you looking for long-term, moderate growth at 6% that will fund your retirement? Do you seek high, short-term gains to jump start your vacation fund? You must be clear about your goals and objectives. If not , your investments will lack direction and commitment.
- Consistently Review Your Goals: You should always review your goals periodically, modify and rejuvenate them. With the changing economic and market dynamics, allowing your portfolio to stay on the backburner could prove disastrous to the number of zeros in your account. Continuously reviewing your goals, and the reality of those goals, are important to keeping your portfolio on the right track.
- Consider Self-Directed Investment: Most of the billionaires today have made their riches through self-directed investment. Essentially, this means taking the reins over your finances. Of course, this involves work, dedication, and consistent learning. You may not be successful initially, but taking your money into your own hands ensures that your self-interest is best preserved.
- Shun Bad Debt: Not all debt is created equal. There is good debt, which is quite different than bad debt. While the former will make you richer, the latter is a road to poverty. Simply put, whichever debt is generating income for you after meeting all the expenses is good debt, and whatever takes more money out of your pocket is a bad debt.
- Become Your Own Boss: When you can keep 100% of the revenues, instead of receiving a 10% cut of the true value you bring to a company, you build your path to wealth. Like any investment, creating your own enterprise has a high risk-to-reward ratio. But the payoffs can be tremendous, both monetarily and personally.
- Exercise Caution with Investment Advisors: Although some investment advisors will have your best interest at heart (or at calculation), not all advisors you meet will be this altruistic. Indeed, generating an income via commissions does not translate into savvy investments for you every time. Before you embark on a relationship with any advisor, conduct research. You can ask to review the past performance of their instrument selection, as well as call several references.
- Allow Yourself to Make Mistakes: There is no fool proof system of investment. Indeed, most wealthy people have made a plethora of mistakes – but learned the main lesson to become savvier investors. If you allow fear of making mistakes to cripple your actions, then you will only remain at status quo. Letting go of your fear of making mistakes empowers you to scale large challenges, allowing you to achieve your full investment potential.
- Treat Hot News with a Cold Shoulder: One of the largest mistakes investors make – especially new investors – is pursuing hot news with their portfolio dollars. Once the “trendy” news has already hit the media circuits, the run is most likely already over, and you do not want to be caught buying high and selling low.
- Be the Tortoise: The adage, “slow and steady wins the race” still persists in our modern era of speed. “Get quick rich” schemes are exactly that – pure schemes. When you take time to carefully map out and walk through your investment plan, the end trophy of financial stability is much more valuable.