Protecting your financial future is imperative. Even having enough money to enjoy life in your retirement is a financial goal many strive for. One way to do that is to become a millionaire.
Start Saving Immediately
There are 22 million millionaires in the United States, according to Forbes. One of those could be you. But you don’t have a shot at it if you don’t start saving early. Build your savings and take advantage of compounding. That’s when you make money off your interest over the years.If you wait 10 years, you could miss out on thousands of dollars. For example, if at 20 years old you start contributing $6,000 per year into an individual retirement account (IRA) for 40 years, your total amount would be $240,000. And that’s not counting the interest you’ll earn. It probably will be much more.
Develop a Long-Term Plan
Millionaires know that accumulating wealth is not a short-term endeavor but a disciplined process that takes decades.- retirement funding
- purchasing property
- securing education.
Invest in Index Funds
Think of index funds as buckets of diversified assets. They can be a mixture of stocks and bonds. Some of the biggest index funds track the S&P 500 Index. This is probably the world’s most popular stock index. The S&P 500 includes stocks across 11 sectors of the economy.- Berkshire Hathaway
- Microsoft
- Apple
- Amazon
- Eli Lily &Co.
- (the entire list here)
Noted investor Warren Buffett, for example, recommends that individual investors buy shares of an S&P 500 index fund and hold through thick and thin.
Avoid Spending and Debt
Don’t buy things you don’t need. And never use a high-interest credit card for purchases you can’t pay off within a month or two.Don’t chase credit card rewards. You'll just eat them up with the high interest you’re paying, and they won’t be worth anything.
Remember, every dollar you don’t spend is one more dollar saved, and that'll make you money.
If you avoid the unnecessary expenses and invest $50 per week, you’ll have $104,000. And that’s not counting the interest and compounded interest.
Invest When Everyone Is Afraid
Stay on course. Market downturns can present valuable opportunities. The adage “buy low, sell high” is a sound course of action.Avoid letting emotions drive you to sell during market turbulence. You can use the opportunity to buy at discounts because others are selling.
Remember your long-term goal. This is critical during the times other fear and it seems to be going south fast.
Don’t Keep Up With the Joneses
You don’t need to look like a millionaire to be a millionaire. What a millionaire seems like in your head is not a reality. Buffett has lived in the same modest house in Omaha for nearly 70 years. He originally paid $31,500 for the home when he was 28. He didn’t worry about keeping up with the Joneses as his wealth grew.Avoid giving into lifestyle inflation. That’s when you spend more money because you make more money. So besides buying the large house you don’t need, when you earn that raise, stay in your modest home if you can.
Set Up Automatic Investments
Investing shouldn’t be an afterthought. Set up automatic weekly or monthly contributions to your brokerage.That will put your investing on autopilot, and you won’t run the risk of neglecting your investments. You also won’t be tempted to spend that money since it’s gone before you realize you have it.
You’ll also be able to benefit from dollar-cost averaging. This means you’ll be buying funds regardless of how the market performs. This will help smooth your average purchase price. A 401(k) is an example of dollar-cost averaging.
Go for Help on Your Journey to Wealth
You don’t have to go it alone. The best course of action to help you implement these concepts is to consult with a financial advisor. Millionaires call in experts.When hiring a financial advisor, ensure that you work with a fiduciary. These advisors are ethically obliged to act in your best interest, not their firms’.