12 Tips To Build Wealth For Early Retirement
How to Retire Early and Wealthy…
Believe it or not, building wealth for a secure, early retirement is actually very simple – in theory.
The equation for financial success is a function of just three easy-to-understand principles:
The amount of money you invest.
The growth rate of your money.
The amount of time it has to grow.
Unfortunately, few people succeed in building wealth because they turn their words into action.This is critical. Most people fail to succeed financially because the rules are easy to understand but surprisingly hard to live by.
Before you yawn and click away from the page, you may want to consider whether or not you are living in congruence with each of the following wealth building tips. You may think you know this stuff already.
Tip #1: Have a Plan-Your Ultimate Road Map
First mistake most people make is they lack a written plan to build financial security. It may be a simple process, but it won’t happen randomly. You make it happen by taking action. Time spent writing goals and building a step-by-step plan to achieve those goals is an investment in your future.
Tip #2: Lifestyle Lags Income
Most people prefer the trappings and illusion of wealth over the freedom of actual wealth. They want to look wealthy rather than be wealthy.
Don’t believe it? Just look around you and see how many people are in debt compared to how many people are wealthy.
They spend instead.
The problem is you will never become rich by spending money. You must control your spending so that your lifestyle lags behind your income.
However, in the early stages you must build the assets so that you have something to grow. For most people that starting point is to save money.
Tip #3: Invest in Your Financial Education
The second principle in wealth accumulation is the rate at which your capital grows.
You must learn before you can earn. It is possible to profit from any market condition if you know what you are doing.
The longer you wait to learn these lessons the more they will cost you. By growing your financial intelligence every day, you are investing in your financial future
Tip #4: Don’t Procrastinate – Start Today
That’s a dramatic change in wealth for just a little procrastination. Procrastination kills time, and as a result it kills more plans for retirement security than all other culprits combined. It is wealth suicide on the installment plan.
Many people procrastinate because they feel uncomfortable and out of place making financial decisions.
Get over it! Nobody is born a financial genius. Everyone has to start somewhere. Just get started and fumble through it. Even silly mistakes are better than doing nothing at all.
Tip #5: Put Your Wealth Building on Auto-Pilot
Arrange you finances so that every month certain actions take place that automatically grow your assets without any decisions or extra effort on your part.
Below are a few examples:
Own Your Home, Rental Real Estate, Tax Deferred Retirement Plans, Automatic Savings Plans, Join An Investment Club, Subscribe to Educational Investment Newsletters.
You can either choose to arrange your life so that growing your wealth and financial intelligence is an automatic habit, or you can let time slip away and allow procrastination to win the day.
#6: Take Responsibility for All Your Investment Results
Unless you are a trust fund baby or win the lottery, the way you will become wealthy is by owning full responsibility for every aspect of your wealth.
This causes you to get into action and correct and adjust your plans until you reach your goal. You must build your wealth like an entrepreneur builds a business: “if it’s got to be, then it is up to me.”
You are solely responsible for organizing your life so that wealth accumulation is a habit. Nobody else will do it for you.
Tip #7: Commit What Is Necessary to Succeed
Successful retirement planning requires you to provide the necessary resources to reach the goal. Don’t set yourself up for failure by under-committing. Don’t commit to real estate as your path to wealth unless you are willing to commit to doing the work required to run a real estate portfolio properly.
Tip #8: Make Your Money Hard to Reach
A pile of savings that is easy and pain-free to reach is an easy solution to life’s troubles.
The rule is simple: when you build a nest egg, don’t raid it. Never borrow money from it for current lifestyle and don’t spend a dime of it until after you retire.
Just let it grow and grow until you are financially free. This is easy to understand but hard to live by.
Tip #9: Risk Management Is Essential
While it is essential to practice defensive investing through risk management it does not mean you should avoid risk altogether by hiding out in Treasury Bills or other so-called “safe assets.”
Tip #10: Use Your Common Sense
Investing is really about business. You can avoid most of the speculative manias and frauds that can rob your retirement plan of principle by simple rule:
The price you pay for any investment must make economic sense consistent with the earning capacity of the underlying business that you invest in.
In other words, valuation matters – it’s a primary risk management tool.
Tip #11: Basic Estate Planning
It is irresponsible to leave a burden for those you leave behind. The fact is you will die with 100% certainty.
Get your affairs in order and make all the decisions about who gets what now. Depending on your particular circumstances this might include:
Powers of Attorney
…and much more depending on your circumstances and desires
In short, there is a lot more to estate planning than just dividing up your assets. It affects your life and the life of your loved ones left behind. You should care — a lot.
Tip #12: Get A Life
There’s more to retirement planning than just money. Happy retirees have fulfilling lives with the health and money to enjoy them. Make sure you have plenty to live for when your work no longer fills your days. Protect and enhance your health by investing daily in proper nutrition, regular exercise.
We never realize the value of our health until we lose it.
Remember, money is just the means, not the end. Family, friends, robust health, and motivating interests are the real tools of a fulfilling retirement while money is just the lubricant.
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Smart Sidhu have diverse industry exposure and extensive professional experience under the belt. Smartsidhu is multi-tasking team leader with high sense of responsibility towards deadlines and have an ability to present concepts and ideas with full conviction.
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