Become a knowledgeable investor
Part 4 of 4 in the White Top View series, 3 Steps to getting rich
Today’s White Top View post concludes our introduction to the three proven steps to wealth.
After covering the critical 1st step, debt control, we continued with the essential 2nd step, saving. Now we turn our attention to the wealth building 3rd step, learn investing basics as the best way of building your wealth. This Part 4 of the White Top View series, Wealth Building a discussing the basic steps to wealth building. Links to all four parts of the White Top View series, Wealth Building are also at the end of this post.
Links to the White Top View series, Wealth Building
Part 1: 3 Wealth Building Steps
Part 2: 1st Step to Wealth – Debt Control
Part 3: Wealth Building Step 2 – Save, Pay Yourself 1st
Part 4: Wealth Building Step 3 – Learn Investing Basics
Debt control and saving are not enough to ensure financial security let alone wealth. We must grow our savings. We must learn investing basics to achieve financial security and wealth.
Know and use the 3 great wealth building allies. Together they make up the most critical parts of basic investing.
3 great wealth building allies
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Time
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Contributions
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Compounding
1. Time
Time is the greatest ally of any wealth building plan. Begin now or better yet, 20 years ago! O.K., so we can’t do that, let’s begin now as the best time to start.
Possibly too old to build financial security? I doubt it.
Consider these facts:
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In any 15 year period the market has ALWAYS gone up.
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You will work until you are 75+ and live to 90+.
With 15 years of effort you can significantly build the base of financial security. With more time or from a substantial base you can build both greater security and wealth. Start today.
2. Contributions
By establishing debt control, the 1st step of wealth building, and continuing through the 2nd step, regular savings, you set yourself up for investing success. That prepares you to use the next major wealth building ally, regular contributions.
Making regular scheduled contributions gives you a wealth building boost that cannot be overstated. Make certain that your commitment is regular and not intermittent.
Any slacking off on this stage of the plan can be the difference between struggling and squeaking by and never retiring or being well off and comfortable and possibly wealthy.
Set yourself up for success. Make no exception to regular contributions to your future and financial security.
3. Compounding
Compounding is so powerful that I cannot overstate this financial magic! In this case the magic is very real. Compounding, the most rewarding wealth building ally delivers the goods. Big time!
Albert Einstein – “compounding is the eighth wonder of the world!”
An example can make this financial power clear. A $10,000 investment returning 20% becomes $12,000 in one year. A nice increase of $2,000!
We stay with this winning investment and in the 2nd year the return increase our total to $14,400. A very nice increase of a further $2,400!
Wow, a second year gain of $400 more than our investment made in the first year! And it all happens at the same 20% rate of return!
By leaving our first year gain of $2,000 profit invested with our $10,000 of capital we were able to begin the second year with a total investment of $12,000. In the second year, the same rate of return, 20%, produced a gain of $2,400 or 20% of the $12,000 that we had at the beginning of the second year.
We add the $2,400 to our $12,000 and have a new total of $14,400.
All this good news happens without adding any new money to our original $10,000 investment. And it continues indefinitely each year. It builds our wealth until we take the funds out.
That is compounding. Compounding lets you gain slightly more each year. By letting your investment compound on itself a good story gets even better year by year!
Unite your wealth building allies
Combine the 3 wealth building allies to create a powerful wealth building process. That can deliver financial security for you and your family. Accelerating the compounding power over many years with regular additional contributions rapidly accelerates your wealth.
Give the process as much time as you can, contribute as much as you can as fast as you can. Compounding and the other wealth allies can open the door to financial possibilities you cannot know any other way. Begin today.
Blast yourself forward towards financial security and wealth
Anyone with an average income and normal intelligence can learn investing basics. From there you can grow to become an able and effective investor.
Most people benefit by having an investment advisor. You most certainly need a financial plan.
Financial planning professional
A financial planning professional is the best place to begin if you are not sure what you need. Some people will be able to manage their own investments without an advisor. However they are the minority.
I certainly encourage anyone so inclined to consider managing their own account. But I do know that most people should not. The choice is yours.
The best clients of a financial advisor are the informed and knowledgeable ones. Even if you would never never consider directly managing your own portfolio, learn investing basics.
Your financial results will directly improve the more you know. You will be a better client and make better and informed decisions which will directly contribute to your financial security and wealth.
There are endless resources available. Besides my efforts, libraries are full of books and Google works 24/7 to bring you an ocean of information.
This ends our introduction but starts us along the learning trail to knowing, understand and using investing basics. Coming discussions include topics on all aspects of investing and how you can use the knowledge to build your wealth and provide for your family.
What to know more? Make a comment or ask a question and we can talk about it.
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Have a prosperous day!
Bryan
White Top Investor
[email protected]
www.WhiteTopInvestor.com
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These discussions and information intend to help you better understand markets and investing. I am not a financial or investment advisor; opinions are for informational and educational purposes only and are not intended as investment advice. For syndication of the site or blog, please contact [email protected].
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Links to the White Top View series, Wealth Building
Part 1: 3 Wealth Building Steps
Part 2: 1st Step to Wealth – Debt Control
