Not ownership of bitcoin guarantees financial independence, but reasonable strategies for saving and investing money. At least that’s what Warren Buffett (the richest American investor) says, who considers cryptocurrency a speculative and unreliable form of earnings.
Although the chances are not great to become as famous as Buffett, you can still achieve financial viability if you follow reasonable ways to save money, while not betting on financial bubbles.
Each person determines the level of wealth for himself, but as a rule, it means that you do not need to worry about paying expenses and understand that your family and your old age will be provided with money.
In connection with all this, we talked about 5 indicators that help identify signs of wealth and build a fortune (whatever that means to you). These tips go foot to foot and intersect tightly with each other. If you are already following them, congratulations! You are on the right track.
1. You started saving on retirement as soon as you started working
Part of each salary, including the first, should be saved – this is a rule that absolutely all financially independent people adhere to. Once and for all, it should become a habit for you to save at least 10% of all your income. Among other things, there is also another important point in which accumulation and savings play a key role. It’s a pension.
Entering it may seem like a long process and not so important, especially when you are 20 years old and you are just starting your career. Nevertheless, obtaining a stable and decent income in old age directly depends on your preparation for this at the moment. Early saving and taking care of one’s own pension through investment or deposits (without state assistance) causes the work of compound interest and leads to a huge increase in capital in the long term.
If you do not know what a compound percentage is, then we will talk a little about it. Its essence is not so complicated, that is, it does not literally correspond to the name. Everything is extremely simple, if you invest 100,000 rubles and get 10% of the annual return, then in a year you will already have 110,000 rubles. Provided that you do not spend your profit of 10,000 rubles, but reinvest it again, then in a year your 10% will bring you income of 110,000 rubles and your capital will amount to 121,000. In other words, your percentage of return will be counted from a larger amount each year and as a result, over a long distance, you can significantly increase your initial investment.
2. You always make loan payments on time, and in full or do not use loans at all
If you have a car loan, a consumer loan, a mortgage or some other, one of the right decisions on your part will always be to make all payments in full in a timely manner. If you miss contributions, the bank in accordance with the agreement has the right to impose fines and additional interest on you, thereby you will return a lot more money than you expected. Also, your careless attitude to the bank will greatly ruin your credit history, which in turn can be very important if, for example, you need money to open a business.
In general, it is better to avoid loans at all and never take them. Not a single financial and investment adviser will recommend you get loans or even worse microloans. If you want to radiate signs of wealth, then first of all you need to deal with your debts and then not have them at all. There are some smart ways, that will help you get out of the debt hole.
3. You are financially prepared for an emergency
Signs of wealth will certainly not do without it. Life is full of unexpected surprises, circumstances and sometimes not very favorable events. Sometimes such incidents can be quite expensive for you. Financiers call it all – contingencies. What will you do in the absence of money if your wheel breaks, your refrigerator breaks, your crane breaks, your child breaks his school uniform or your work equipment is out of order? Most likely you will start lending money. It is in such cases that people just fall into endless credit red tape and debt obligations.
That is why it is very important to have your own emergency fund, which, if anything, will help you not get into debt and give you more freedom and financial security. The creation of such a fund is also carried out with the help of savings and those notorious 10%, which we talked about in the first paragraph. Experts recommend storing your emergency stash in the amount of 6 to 12 sizes of your monthly income.
4. You do not spend all the monthly bonuses and bonuses in full, but invest additional income
If your first thought when receiving the bonus is that it’s urgent to spend all that night in an expensive bar, having fun and treating friends with friends, we have bad news for you. In this way you will never become wealthy.
The thing is that rich people, when receiving additional income, invest it in those things that we talked about above: paying off debt, own emergency fund, or they start investing in the stock market and their own business.
If all this seems insanely boring to you, then try to spend no more than 20% of your bonus in the bar, or rather invest at least once in pumping your work skills: buy new equipment that will help you work more efficiently or improve your skills through courses, thereby you can receive big bonuses and earnings in the future.
5. You are investing in the stock market
No list of signs of wealth can fail to mention the importance of passive income and the work of money for you. Therefore, if you are not already familiar with the topic of investing, then it is time to start getting acquainted. The worst investment is their lack. Almost all wealthy people are somehow connected with the stock market and investing.
If we said the worst investments, then we should also mention the indicators of the best investments. So, you can make money in the stock market if:
• Invest for a long period of time (5 years or more)
• Look for inexpensive stocks, undervalued companies, companies (when choosing, see the P / E multiplier)
• Diversify your portfolio (invest in different companies and assets – stocks and bonds.)
• Your portfolio is quite aggressive. This means that you prefer high-yield stocks. The most common combination of assets is 70% of shares and 30% of bonds..
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