Home > Business, Business ideas > Some simple ways to get rich!

Some simple ways to get rich!

Judging by their behavior, most people have an obsession with wealth.
Politicians promise to create it, most popular magazines are filled with
gossip about those who have it, and the average person spends much of
their adult life trying to obtain it. We are creatures obsessed with
money, partly for what it can buy, but also as a thing of value in
itself.

But most people misunderstand money. They don’t really know how to obtain it, or how to hold onto it once they have it.


If
you’re interested in getting rich, I’m going to give you the simplest
formula for doing so. In fact, if you follow it you’re virtually
guaranteed to build enough wealth to get you into the top 5% of society.
As the shampoo advertisement says: “It won’t happen overnight, but it will happen”.

The hardest way to get rich

Before I go into my formula, let me tell you about hard ways to get rich.

One
of the hardest is to be born into it. Of course, if you happen to enter
this world as a Hilton, a Gates or a Windsor, then life is sweet. But
since 99.9999% of the population aren’t that lucky, I’m assuming you
didn’t win that particular lottery.

And speaking of lotteries,
gambling is another very difficult way to get rich. Sure, some people
buy a lottery ticket and win big, but most don’t. You can gamble your entire life and you’ll most likely end up broke rather than wealthy.

When
I was younger, I thought the easiest way to get rich was to become
famous through some kind of creative act. Stephen King got rich writing
horror novels, so why not me?

I’m now much wiser and realize
that the vast majority of novelists never even get published. Of those
who do, most wallow in obscurity. Only very few make it anywhere near
the best-seller list, and only one in a million will achieve any kind of
serious wealth.

The same fate awaits the majority of musicians, software company founders, sportspeople and website creator. For every Google
that makes its owners billions, there are a million websites that lose
money. Creativity is the most fun and rewarding way to get rich, but
it’s also a very difficult way.

The reason the media raves about
and idolizes those who’ve built wealth through creativity is because
they’re so rare. You don’t hear about the vast majority who wallow in
obscurity and poor pay, because they’re not interesting. “Young genius
makes $1 billion from website” is a great headline “Ten thousand young
geniuses make nothing from their hard work” isn’t.

I’m not saying
you shouldn’t keep your dreams alive. It’s one of the best parts of
life. But this article isn’t about the most fun way to try and get rich –
it’s about the easiest way.

Okay, here’s the system.

Step 1: Get a well-paid job

This
is a reasonable amount of work, and takes a few years, but it’s a
virtually guaranteed way to make a good income. If they’re willing to
put in the work, almost any intelligent person can get a job
paying $100,000 or more within the space of a few years. While it’s not
easy, it is by far the easiest and most likely way to secure a good
income. In fact, I’ve already written an entire article on how to get a job paying more than $100,000 a year for those who wish to pursue this avenue.

Step 2: Get good tax advice

However
you make your money, your number one expense is likely to be funding
the government. In most developed countries, the average worker pays
around 30% of everything they earn straight into the taxman’s pocket. If
you’ve taken my job advice, you’ll most likely pay even more than that.

While
taxation is necessary to fund the good things governments provide, you
don’t do yourself any favors by paying more than your fair share. If
you’re serious about building wealth, get a good accountant who
understands how to legally minimize your tax bill.

Step 3: Save 20% of everything you ever earn

As soon as you get paid, arrange to have 20% of your income removed into a savings account. Many banks can do this automatically for you. Keep your savings account separate from your spending account, and you’ll barely miss this money.

There’s
a saying in economics “expenses rise to meet income”. This means money
that’s easily available to you is certain to be spent. That’s why most
people’s paychecks disappear before their next payday. They get used to
having a certain amount to spend, and habitually run down their bank account.

Have your savings moved somewhere it’s a hassle to get them out of to avoid this risk. Many high interest accounts require you to give them a few days notice, which is ideal for this purpose.

Step 4: Conservatively invest the funds that build up in your savings account

Once
a month, go into your savings account and divide the money by investing
it into the three core conservative assets: shares, property and cash.
Open a mutual fund account for shares, a property fund for property, and
a money market fund for cash.
Look for share and property funds that invest in a broad range of assets
and most importantly charge very low fees. An index fund is ideal for
the shares. An index of property funds is ideal for property.

Put an equal amount into each account.
This will diversify you against risk in any one particular asset. If
you’re younger, this rule is a little bit flexible, allowing you to take
a little more risk and put more into shares and property if you like.

Step 5: Reinvest any income you get from your assets straight back into buying more assets

Mutual funds and property funds pay dividends. Money market accounts pay interest. Don’t take this income into your spending account. Instead, select the option to have it reinvested into the fund that generated it.

Step 6: Never touch these funds and do your best to ignore them

The
business press, like the mainstream press, loves a crisis. “Shares to
skyrocket” or “Property to plummet” headlines will sell many more copies
than “Things to continue steadily”. All markets go up and down. Every day, some speculation will be published about some crisis or opportunity.

Ignore it all.

Just
keep putting the 20% into your assets. Sometimes they’ll go up and
sometimes they’ll go down in value. But over the long term, they’ll
almost certainly go up.

Step 7: Wait a decade

Do
what I’ve outlined above and in a decade you’ll be rich. Sure, you
won’t be Bill Gates, but you’ll almost certainly be in the top 20% of
wealth holders. Wait another decade and you’ll be in the top 5% or
higher.

That’s the plan. It’s not the most exciting or glamorous way to build wealth, but it’s the easiest. Quite simply, this
is how most rich people got there.

You too can join them, if you follow it.

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Categories: Business, Business ideas
  1. October 13, 2010 at 5:41 pm

    This is great article. thanks for sharing.

  2. Anonymous
    October 14, 2010 at 10:06 pm

    Nice and useful but I still can't save enough money for an XBox360!

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