Monday, April 24, 2006

Becoming a Millionaire

Becoming a Millionaire
It's not really all that difficult to become wealthy. Wealth means different things to everyone, but I feel it is simply 'a comfortable financial state'. Maybe you don't want to be a millionaire but most people do, just simply because of the status that many people see attached to it.

Here are my three steps to become wealthy:
  • Spend less than you earn. Not a hard concept. As many people receive raises at their job or encounter new income - they also increase their spending. "I got a raise at work so I should treat myself to a new car." This is not a good way to get ahead, always spend less than you earn.
  • Invest. There are millions of ways to invest but the important part is to put your money somewhere that you think will earn a return. Make sure you diversify your investments so if one drastically drops - you won't lose the farm. Examples of investments are the stock market, commodities (oil, precious metals, etc), real estate, a business, precious coins, stamps, art work or antiques. Pick something you enjoy or think you would be good at.
  • Keep adding to you investments. Keep adding to your investments over the years. If you are unaware of the term 'compounding interest' - do some research on it. It has a profound effect that I believe many people either don't know about or don't pay much attention to. This is the key to making many people wealthy. The earlier you start investing, the better the effect of compounding interest.

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