Building wealth isn’t that hard if you have money. Even if you save a few dollars in your younger years, that few dollars can soon turn into hundreds of dollars if you invest properly. As you grow old, though, you’re going to want to make sure that you’re building wealth the right way, because if you’re not, you will quickly find yourself working until the day you die. To help you build wealth successfully, here are six wealth building mistakes you should avoid:
#1 The Fear of Trading
Many people often think of the depression era and instantly assume that they have to store their money in a mattress. Living in fear while saving your money isn’t the way to go, and if you think that the government is absolutely going to fail on you, you’re probably better off living in the woods away from civilization. The younger you are, the more you should take advantage of riskier investments such as stocks.
While you don’t have to predict the next Facebook, experts will tell you that you should subtract 120 from your age. Whatever number you get before the negative sign is the percentage of your investment that must consist of stocks. So, for example, if I am 29 years old, I should have 91% of all my investments invested in stocks (29 – 120 = -91).
#2 Not Getting Professional Help
I’m heavily against professional help since they only think about their wallets and not mine. This doesn’t mean you shouldn’t get professional help, though. What you will find is that many professionals, especially the non-profit agencies are more than happy to offer advice with your particular situation.
They may be able to offer particular stocks, mutual funds or other investment options you may have never heard of. While you don’t need these professionals to invest your money, it doesn’t hurt to get some tips.
Watch your broker when performing mutual fund, stock or other trades. How much are you paying for each trade? Also, if you have a mutual fund, how much are they taking in terms of fees? You would be amazed at how much goes to a fund manager. Try to see what you’re paying in unnecessary fees each year.
#4 Not Diversifying
Don’t just throw all of your money in the money market account that is yielding you 1%. This isn’t going to make you rich. Again, while you don’t have to invest solely in stocks, it doesn’t hurt to diversify and invest in bonds, real estate, mutual funds and more. The more your money is spread out, the safer you can be in the future.
#5 No Budgets
Each month, plan on budgeting how much you want to save, and make sure that you stick to this plan. With so many calculators on the web, these tools can help you determine how much you’re going to need in order to retire. When using these calculators, though, just make sure that you factor in inflation for the future. With those numbers, you should know exactly where you should stand month after month to be on pace for retirement.
#6 Not Saving Enough
Using tip number five, it’s important that you’re saving enough. Remember, you don’t want to rely on social security when you retire. Even if it’s there, it’s not going to be enough to live a lavish retirement. Take a look at your lifestyle now and determine what you want in retirement. As long as you have that budget in play and you save enough each month, you shouldn’t have a problem reaching your goals.
With a goal in mind, discipline and lots of money making, wealth shouldn’t be hard to build. Remember, wealth is different to all of us. Wealth to you may be $10 million while it’s only $1 million to me. Keep your eyes on the prize and there’s no reason you can’t live a fantastic retirement in the future.
Article by Hannah Munson
This post was written by Hannah Munson. Hannah runs the website www.Howmuchisit.org. This is a website that helps consumers find pricing on just about anything ranging from health to household goods.