Sunday, October 12, 2014

3 Simple Steps To Building Wealth

It is always good to have friends that will remind and advice you to continuously invest for your future however you must be willing to learn and do it for yourself. It's never too early to start saving and investing. The good news is if you are young and started early you have time on your side with a long time period for compounding to grow your investments.

Determine what you should be saving/investing for. First, you should make sure that you have an emergency fund in place. This safety net should cover basic expenses for several months and prepare you for unforeseen expenses such as loss of income, or anything else that can put a roadblock in the middle of your financial plan.

The best way to meet this target is to follow this simple equation of “Income – Saving = Spending”. First save, then spend of what remains. Look at investing toward retirement savings or invest toward other purposes like buying a house, education, etc.

Don't put all of your money into any one thing or any three things - diversify. Diversification is good. For steps in building wealth, please read below. A message shared by Edmund Lao.

Basically, building wealth boils down to this: To accumulate wealth over time, you need to do three things:
  1. You need to make it. This means that before you can begin to save or invest, you need to have a long-term source of income that's sufficient enough to have some left over after you've covered your necessities.
  2. You need to save it. Once you have an income that's enough to cover your basics, you need to develop a proactive savings plan.
  3. You need to invest it. Once you've set aside a monthly savings goal, you need to invest it prudently.
Building wealth is not a one-time process.. you need to do it regularly. 

All the best!
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