Accumulating Wealth: An Overview
Thursday, June 28, 2007 | Joseph Conlin Is this Spam?Sometimes in my desire to learn everything I can about investing, I find myself missing the forest for the trees. The reason I want to learn about investing is to accumulate wealth that will allow me to live the life I want to.
I have discovered three major principles to building wealth that help me to keep things in perspective. Each principle has many sub items that each would deserve their own article, but for this article I'll stick to the overview.
The three principles are Earn, Save, and Invest.
Earn
In order to accumulate wealth, you have to be able to receive payment in exchange for work of some sort. Many people do this by working for an employer, but there are lots of ways to create an income.
Some of the sub items that would fall under this topic would be finding something that you are good at and that you enjoy doing for work, getting the proper education to do the type of work you desire, learning to run your own business, improving your skills as much as possible to make yourself more employable and eligible for better raises, bonuses, other employers, etc. Do and learn whatever you can to allow you to earn the best income you can doing something you enjoy.
Save
No matter how much money you make, you are not accumulating wealth if you spend it all, and you are even worse off if you are spending more than you earn. Debt is a double edged tool which can help or hurt you depending on how you use it.
I highly recommend looking into "The Richest Man in Babylon" for motivation on saving. The stories are quite interesting, and it shows that money management, of which saving is a large part, hasn't changed much in thousands of years.
Issues relating to this topic include ways to reduce expenses to live on less than you earn, strategies for getting out of and then properly using debt, where to put your savings to greatest effect, understanding how tax laws work, etc.
Invest
This topic ties closely to saving, because it's the money that you have saved that doesn't need to be in a short term account that you can use to invest. This is the money that you are preparing to provide yourself with your future income. Once you have this money providing the income you require, you no longer need to work to provide your earnings.
No matter where you are now, with hard work, enough time, and the right knowledge you can reach the point where your investments can provide enough income for you to be comfortable. You may not live lavishly, but you won't have to be an associate in the local Big Box Mart if you don't want to.
I won't list out the sub topics that can go with investing, as that is what we have The Tycoon Report for. Be aware of the various instruments available to you, and how each one can best benefit you. Your investing will change as your age does, so don't lock yourself into only learning about what you need to know at your current stage of life.
There are the three major principles of accumulating wealth as I see them. Let me know what you think!
