“How can I grow my wealth this year?”
I bet that’s a question that has been on your mind since the year begun. As a financial planner, I hear this question all the time. A lot of people out here simply want to create enough wealth that provides them financial security and fund their lifestyle – which they can – if they develop simple habits that will set them up for financial success.
There are no shortcuts to building wealth, just habitual saving and investing through consistent efforts that ensure that you attain long-term wealth.
Aside from the conventional, sticking to the budget, tracking spending, automating savings etc., here are other simple habits that you can adopt this year to increase your
1 – Diversify
Building wealth over the long-term in a market that moves up and down can be challenging. Diversifying your investments by putting your money in different asset classes is better protection for your overall net worth.
Choose to spread your savings across the market, industries and selecting various classes of assets or investment types i.e. holding a varied portfolio of stocks, funds, real estate and bonds. Hold different stocks or invest in funds that are broad in nature.
2 – Invest Loose Change
Get in the habit of putting all your coins or spare change in a piggy bank and then at the end of the month, collect that change and put it in a savings account or invest. By getting into the habit of valuing, saving and investing small change early and taking advantage of compound interest, will make a big difference to your over net worth over the long haul.
At the end of the month, you might find yourself saving/investing at the very least KES. 1,000 a month- easily. Hustle free. In reality it is never about the amount you start with, but rather the time your money has to work for you that matters.
For instance, imagine if you bought shares at the end of every month with your KES. 1,000 a month. Over time, you’ll hold a substantial amount of shares, perhaps worth a substantial amount.
3 – Make Time Your Friend
This year exercise a lot of patience with your finances. Learn to ignore the short-term market fluctuations and invest with at least 10 years in mind instead of days.
On a day to day basis, stock markets are basically a coin toss, moving up and down. However when assessed with a long-term view in mind, the picture changes as the market rises more and more, than it actually falls.
4 – Accept Risk
A lot of people are afraid to take any risk with their money. They would rather simply hold it in their bank accounts. They refuse to invest in anything because the idea of losing even a shilling is too painful for them.
If you are like this, this year try and dip your toe a little and accept some element of risk. All investments come with some degree of risk and this is a reality we all need to accept and move forward with. Remember, even sitting cash also carries it’s own risk in the form of inflation, opportunity cost and the risk of losing out of investment opportunities.
5 – Hold Assets
2019 should be the year where you seek to grow your asset base rather than increase the stuff you own. If you want to grow wealth this year, focus your energy on growing wealth – not spending.
Spend your time seeking out land to buy, shares to invest, businesses to start etc., anything and everything that will appreciate in value.
6 – Invest Unexpected Cash
We all come across extra money in the form of gifts, bonuses, a raise etc. The best way to handle this unexpected windfall is to pretend that the money does not exist.
Get in the habit of putting this extra cash to work rather than spend it. This way, you can avoid lifestyle inflation when you get a raise or spending all your years bonus without actually getting real value from it.
Finally, Begin…
Start today and remain consistent. Be committed to winning this year and not rely on luck to get you through.
Image: Top by Pixabay via, Pexels.
Other Related:
- 8 Habits of Financially Successful People that You Should Follow
- How Much of Your Pay Should You Really Save?
- Money Habits & Raising Money-Smart Kids
- 8 Financial Planning Rules of Thumb You Need To Know
- 5 Habitudes of Successful Wealth Builders
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