What the rich know about building wealth and you... don't

Building wealth is a fun activity. Saving up money for your retirement or education for your kids is essential. But what if your goals are even bigger? Financial freedom and no need to work? Sounds great! Now work towards your goals!

But how do I learn to invest? There is so much material put there! Keep in mind that no one was born learned. We all make mistakes. We all have expectations and reality breaks them into pieces. How can you avoid making some big mistakes? By reading and learning from experienced people. Here are several points that will guide you through the path of building wealth.

1. I buy assets. Or do I?

Many people think that assets are everything that has a cash value. Then others didn’t even know what is “asset”. Anyway, the real definition of this word is a bit different. An asset is something that generates money. In other words, it fills your pocket with sweet cash.

Let’s borrow an idea from Rich Dad Poor Dad by Robert Kiyosaki. We have a box with our “Income”. There is an arrow that goes from “Income” through “Expenses”. Under it, there are two more boxes – “Assets” and “Liabilities”. The liabilities are possessions that only take money out of your wallet. Here are a few examples: TV, furniture, car, cell phone, and others.

There is another kind of asset. They are "neutral assets". You don’t really know if their cost will beat inflation and maintenance cost: house, artwork, expensive accessories, collectibles.

If you want to climb the ladder of wealth, buy REAL assets.

2. I just invested in a company! I'm gonna be rich in two weeks.

Every investor has thought about hitting the jackpot and getting rich overnight. Even if you weren’t convinced in this dream, it has passed your mind at least once. And this is completely fine. We all want immediate results. Sadly things do not happen exactly like that. 

There are stories about people who got rich the moment they invested in a company. In such cases luck and doing your thing in the exact moment play a big role. If you are not patronized by Tyche, summon all your patience. 

To be a successful wealth builder you have to have an investment strategy and develop a plan to achieve your goals. Ensure that your investment decisions are consistent with your overall strategy. There is something like a rule – “The longer you hold it (stock, bonds, debentures, real estate, etc.) the better off you’re likely to be. The economy of a country is like a living creature. It grows, shrinks, gets sick and then rises again. Don’t try to tame it. Try to dance with it. 

3. Investing is hard! You need so much money!

“I don’t have enough money!” An excuse that is very popular among scared people. It also is a misconception. Real-life is different from the movies. You don’t have to invest hundreds of thousands of dollars holus-bolus. Starting small is as good as starting big.

So we are a young person with a good salary. Or we have been promoted. Or whatever! Try to spare some money from our payment. No matter how small we start with consistency the savings account will grow. Now let’s say we have 400-1000 dollars. This amount may seem small but it’s perfect for a start. In fact, 200 dollars are fine too. There are so many opportunities! If there's a will, there's a way.

4. I can do it myself

Young business people/entrepreneurs will often do most of the hard work alone. Or at least they try to do so. The attitude “I know it all!” results in realizing that you don’t know it all.

You have seen how a sportsperson tanks his/her coach. No matter how great they are their coaches are always next to them. Socrates had said it the best – “The more you learn, the more you realize how little you know.”

While you may have an idea in what to invest, most of us lack expertise and knowledge. It’s not only about making money. Avoiding mistakes is just as important. Building wealth is a journey. It’s unique for each one of us. Our game strategy changes with every decision we make. We win. We fail. We learn. We grow. Good advice can impact an investment, great advice can change your life.

Conclusion

There are many ways to build your wealth. Don’t get overwhelmed by this fact. Pick a few things that you are passionate about. Do them well and things will work out. Start by investing in yourself. Our biggest asset is our mind. 

It’s never too early to start investing. You know Nike’s slogan, right? So what are you waiting for? Just do it!