Tuesday, December 23, 2014

Simple secrets to building wealth

There are probably tons of books written on how one can get rich or become wealthy. Yet, the secret to building wealth is probably much simpler than most people can imagine. If I could choose three words to describe it, I think the appropriate words would probably be "income", "invest" and "persistence".

Firstly, without income, it is very difficult to become wealthy. The only instances one does not require income is probably if you have a large inheritance or you are starting a business (when you have the intention of selling it). At the end of the day, one cannot accumulate assets if one does not have income.

Secondly, one will need to invest.This can be in any instrument. But the idea is that you are only able to invest if you have money left over from your income after taking into account all your expenditure. In most instances, one is able to invest only when spare cash is available.

Lastly, it boils down to persistence. spending money today always seems more tempting and rewarding then saving it for a rainy day. This is especially so when instant gratification seems to be a large part of our culture today. We rather be seen with a Starbucks coffee in hand rather than saving that money and investing it. This is an everyday battle where our heart will tell us to spend when we really ought to be saving. In addition, one also needs persistence to continue saving and investing even when the markets are bad. This is probably very hard since we are all probably wired to try to avoid risk and danger. But the best time to buy is probably when the market is in its doldrums.

4 comments:

  1. Hi FF,

    Wondering why you said that if you're starting a new business, you don't need income... care to explain?

    ReplyDelete
  2. Hi LP,

    I was thinking of people who build businesses with the intention of selling them. Sorry, it was not clear in the post. Some of these businesses, the founder often draws a meagre salary for the first few years. When they are subsequently bought out by some other company, the money is usually good enough to compensate them for the lack of income in the first few years. This of course does not apply if you are just running your business for the long haul and depending on it for an income.

    ReplyDelete
  3. Those three words really motivates me..."income", "invest" and "persistence"!!! Thank you for sharing this interesting blog...
    wealth management bakersfield

    ReplyDelete

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