The Biggest Misconception About How To Become Rich
The biggest misconception about how to become rich is that there is a way to do it quickly. The truth is that becoming rich isn’t an event, it’s a process.
Let me explain.
First, realize that becoming rich should be more properly referred to as becoming wealthy and building wealth should be your goal. No matter what you call it, you must dedicate yourself to plan for it if you want to achieve it.
With the exception of inheriting loads of money from a relative or picking the winning numbers for the lottery, your amassed wealth will likely be a direct result of diligent planning on your part. This planning must include your willingness to be patient in building your wealth. That isn’t to say that you shouldn’t strive for immediate profits. To the contrary, your goal should be to consistently achieve immediate profits and then roll those profits into your next investment.
As part of your planning, you’ll want to make sure that you achieve those consistent profits by choosing investing options that are most likely to always have positive returns instead of those options that fluctuate. Fluctuating returns are counter to your overall investing goals as it is the consistency of positive returns that you’re seeking.
Do you know about compound interest?
Compound interest is the concept of earning interest on your investment and then rolling that interest into the principal of your next investment. Compound interest is the most powerful tool in creating wealth. True wealth is built over time.
Here’s an example:
If, at age 30 you placed $5,000 in an investment earning 8% interest and let it grow until age 60 without adding additional principal, your compound interest investment would be worth $50,300.
If you had placed that same $5,000 at 8% at the age of 20 without adding additional principal and let it grow to age 60, your compound interest investment would be worth over $108,000.
Waiting those 10 years to invest just cost you $58,000.
What’s more, if you had added an additional principal amount of only $500 per year, your total compounded interest investment would be worth a whopping $248,000!
Now, suppose that your investment fluctuated – sometimes losing money and sometimes making money. Those losing trends would have reduced the amount available for compound your interest.
Begin using secure investment options as early as possible and watch your wealth grow exponentially. The power of compound interest is amazing and it is often declared as “the most powerful force in the universe.”
Take a look at this video about compound interest and you’ll see exactly what I’m talking about.
Mike Bridges
