Many dream of becoming rich but very few achieve it. If you are young, the easiest way to become wealthy is through long-term investing in the stock market. If you are in your 20s and say you have 50,000 to invest and you do so with an average rate of return of 10%, 10 years later or in your 30s you will have 129,687, a further 10 years later or in your 40s you will have 336,375 and leaving your money invested for a further 10 years will ensure your money has grown to 872,470. So if you are young and have a long-time frame, investing in the stock market can make you rich.
But what if you do not have a long time horizon. What if you are middle-aged or older and want to get rich in the next 5 – 10 years, what do you do In order to become rich when you have a short time horizon, you need to do so by thinking outside the box – you need to do something different than investing in the stock market.
Many people who got rich within a short time period consistently did the following 5 things:
1. They are frugal spenders and aggressive savers, far outpacing their peers. They know the key is to spend less than they earn and they invest the difference back into their business.
2. They understand and manage their debt. They do not let debt manage them. Many people today are obsessed with credit and have the I want it now mentality. If you do not have the money, do not buy it.
3. Start their own business. Their primary focus is on starting and growing their own business. They know that building a business is the key to quick riches. When starting a business, it’s probably cheaper to consider starting it online. This is often the easiest way to grow your business. As a new online business, it can be difficult to get significant sales for a while. However, by using personalized communication as a marketing strategy, online businesses can look to build trust between their brand and the customer, increasing the chances of the customer purchasing from them. It’s vital to look into marketing as that’s one of the best ways to get your products out there. Being online means your business can reach many more people. Additionally, by creating an online business, you don’t have to pay any building rent or any other costs like that. This also means that you can work from home. Whilst working from home can be extremely beneficial for many new business owners, they will have to post their home address on their websites. If some business owners don’t feel comfortable doing that, they might want to try a registered office address instead. This can give them an office address to use on their website, making the business look more professional.
4. They invest in real estate and other non-mainstream opportunities. You see with investing in property through a buy to let mortgage, you use the power of Leverage. By this, I mean that you only need to pay a partial amount of money for the property whilst your bank pays the majority. Let us take an apartment worth 100,000. You only need to put 40,000 down and your banker will put 60,000. By renting out the property, your tenant will be paying off your loan for you, this is called leverage. Furthermore, if your apartment appreciates in value to 120,000, that is profit for you as your bank will want none of that. You will also get a tax advantage too instead of paying capital gains tax of 80,000 (sale price of 120,000 your original purchase of 40,000), you only pay capital gains on 20,000. However, if you are considering investing in multiple real estate opportunities, then you might want to do some research into finding a property management company first. Running a real estate empire is no easy task, and some things are best left to the experts, especially where property management is concerned. Be aware that if you are thinking about renting out your property for tenants to live in, then you may want to think about getting homeowners insurance for your rental property. If you are struggling to find any insurance that best suits your needs, then you may want to check out BST Insurance (https://bstinsurance.com/products/tenants) for some useful tips on what you may need to consider to make sure your home is covered.
5. They invest in stocks and bonds to preserve their wealth as opposed to creating their wealth. To get rich with stocks you need to have a long time horizon. If you are looking to get rich quick, long-term investing is probably not for you (Although you can learn to trade stocks with ETORO). The rich mainly use the stock market as a tool to preserve their money and slowly increase is as opposed to using it as their primary wealth beading mechanism.
Many younger millionaires did not become millionaires through the stock market. They only started investing in the stock market once they had made money through their own businesses.
Do not get me wrong. I am not saying that investing in stocks has no value the older you get. Investing in stocks is essential. But it is not the way to get rich if you want to do it quickly.