At a very early age we teach our kids how to spend money but rarely do we teach them how to earn it. Even in school kids learn how to budget money but learn very little about how to acquire it, retain it, and grow it. Making money is eventually taught to most people by their first boss on their first job when the boss he gives them their first tasking and tells them that they’ll be fired if they don’t do it well. Most of us sort of stumble into how to make money.
The strategy above may make you money but it will not make you wealthy. You are simply selling your life for a mediocre lifestyle and it’s probably not the lifestyle you wanted or thought you were going to eventually have in life. It’s only later after the realization that you can’t do it by yourself that the lightbulb finally comes on. You need to begin to live within your means and start to put any excess income to work making money. Make your money work for you as hard as you work for your money. Even during the deepest depressions of years past smart people saved for the possibility of even harder times in the future. They wanted to attain that financial security that only comes with the freedom associated with wealth. It’s this idea of doing without today in order to have a better future that guides me even today. It's what truly creates wealth. And the sooner you get started the sooner you’ll be wealthy.
I’ve discussed compound investing in an earlier article and it might even be worth reading again (most of my stuff is worth reading several times!). Even Albert Einstein recognized the value of compound interest. He talked about compound interest being man’s greatest invention and possibly the most powerful known force in the universe. I've always been interested in applying this concept to my stock investing. My idea was to find companies that increased their sales and earnings by at least 8% (more is better) and watch the value of my investment increase (compound) at that same rate. It was a simple idea that’s been my guiding light for all these years.
Consistency and patience are the keys here. You don’t have to have a lot to start but you have to start and the sooner you start the better. Your income may vary from year to year but you should continue to save and invest whatever you can, regardless how little that amount is. Hopefully it will grow at that magical 8% (or better) compounded rate throughout your life and your golden years will truly be golden.
Good Luck and Good Trading.