In life today, we find every single aspect of it financially high and financially demanding. That is why everyone has been on a large race of creating wealth to meet all this high financial level and responsibility. I want to discuss about wealth creation, someone asked me saving your money versus investing your money which one goes best, and what one should put more interest and effort. This brought to mind to find out
How is wealth created?
Wealth is created, actually by creating some value at some point. Wealth is created by sharing your skills with others that is just the way wealth is created. You can’t just create wealth by saving your money alone. Saving your money is a good habit yes. But ultimately, you need to invest your money, put your money in an avenue or in a platform if you like where it will work a lot hard for you. This is actually what the rich are doing, and also what we need to master to get ahead and create generational wealth. Wealth is not created by saving your money alone. Always have this in mind that an entrepreneur is someone that solve problems of others to create income. This is another typical way wealth is created.
Now in a nutshell with these few points one can actually generate wealth:
- Investing your money where it will work lot hard for you.
- Having a long-time investment in mind.
- Investing in yourself
- Taking calculated risk.
- Understanding how time works
- Create passive income.
INVESTING YOUR MONEY WHERE IT WILL WORK LOT HARD FOR YOU:
One can create wealth by putting his or her money where it will work a lot harder. Investing your money in real estate, dividend paying stock, bond, investing in gold and silver and so on. These are the things you need to do to create wealth. You have to channel your money and earn an income. Investing is a risky business. Don’t get me wrong, I totally understand that and that is true. But how do you minimize the risk? you minimize the risk by doing the necessary fundamental research, doing due diligence research about the company you want to invest in before you start. Have not just in mind that I want to buy this property. The research you ought to make should be, where will I buy this property? Who am I renting this property to? How much am I getting from this property? This are the necessary research you need to do before you put your money into investing in the property. Buy asset that will appreciate in value, investing in the stock market are one of the best way one can actually create wealth.
HAVING A LONG TIME INVESTMENT IN MIND:
You have to bear in mind that you will be there for long growth, it’s not something you go in and out, it really a long-term practice. This is actually what the rich do, because they understand the game and play it well.
So, investing alone is not just the idea, investing alone is a good habit, but you need to understand the idea of investing in a platform you would get income, capital appreciation and dividends from. The dividend is the amount of money you get from a company you are a shareholder in the management team pay this money from the company returns. It can be every 3 month, every 6 month or yearly. I would encourage you to do make sure you research a company that has a track record of paying dividends to shareholders before you invest in it. Putting your money in bank does not generate many incomes due to low interest rate, even the bank uses your money for capital appreciation by lending your money to other people. So, investing your money in real estate properties, in platform that create incomes for you and asset that appreciating value, is actually how to create wealth and all this don’t just happen in a short while but in a long run.
INVSTING IN YOURSELF:
Wealth can also be created by investing in yourself, in learning a new skill that would increase your earning capabilities. This can also help you create generational wealth. Education and knowledge are the new oil. The best moment to invest in the market is when everyone are scared of investing and when the market is depressed. Learn a skill people are scared of learning because of difficulties it would give you an edge. That is why you need to put it in mind that you are going for a long-time investment. You don’t lose in investing, except you sell off lower than you bought it.
TAKING CALCULATED RISK:
People who want to create wealth, provide value to people. They have patience, self-awareness, but also, they take risk. They don’t blame people; they take total responsibility. You got to take some risk at some point for you to create wealth. The risk you are taking is taking a bet in uncertainty investment and project. What you need to do is making sure that you are doing the necessary fundamental research. The research you are taking is something that will insulate you from falls and swings in commodities prices and provide with certain help as well.
UNDERSTANDING HOW TIME WORKS:
Time is also something that you need to understand how it works. The longer you are in the market is better off than been outside. You need to learn the time to invest in stock market, and invest in assets that is appreciating in value, or in real estate property. If you don’t have idea how to invest in estate properties, get a property trust fund that will help you buy assets and pay you your dividends. Get to understand the management team of the company, the value they create, the problems they solve to consumers, and understand weather it is a company that will last for just 20 years or 10years time. So, you need to understand the time on how to invest in properties and understand if there is a seasonal effect in the investment you want to make. The long you get your self in market the better prospect as with time you are able to ride the waves of volatility in the market.
CREATE PASSIVE INCOME:
You need to create a passive income at some point to create wealth. Passive income can be created by buying a property and putting it into rent and create wealth from there. Saving your money is good but it’s not the ultimate way to create wealth. Evidence have it that stock market yields about 7.8 to 9.8% return, so you see investing in stock market can create you a passive income to create wealth. Saving your money in bank is not an ultimate idea like I mentioned earlier. The interest rate you get in bank is normally between 0.1% and 0.2%, which is very low due to the fact that inflation is really high. So, creating a passive income is something to do as it would really help boast your income to be able to meet financial needs. There is no straight line in creating passive income, but you must put your money to work to create that idea of earning money without actively involve in generating the income.
CONCLUSIONS:
So asking if saving your money or investing your money which one goes better, I would say saving your money is good but it’s not a way to create wealth. You create wealth by investing your money. When you gain income, you invest again into assets that will provide you with income. You don’t create income when you channel your skills to you alone, but when you share ideas and your skills you create wealth also.
So, we need to understand all these few steps to take so as to create generational wealth.
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