Wealth and Assets
Wealth: that elusive characteristic that almost everyone desires but that very few ever attain. One reason it is not attained is that the long-term nature of its accomplishment is not appreciated, living as we do in a society dedicated to immediate gratification.
Time is on your side in building wealth and it's the little things that count. We tend to 'bit and piece' ourselves into huge debts (a TV here, a dinner out there, a new car that is not needed, another new cellphone, all on credit because you want them NOW). These are the things that are keeping us chained to the mediocrity we try to rise above.
As we covered earlier, society is a bit crazy on the subject of money, not only holding it on a pedestal and craving it (and thus denying it to oneself) but also wasting it once we have it in our hands. The constant push for immediate gratification at every turn causes us to spend more than we earn, the difference showing up in increasing credit cards balances and other debts THAT ARE NEVER PAID.
Just as easily though, you can bit and piece yourself to wealth according to some very powerful materials I have studied. Reviews for these will start to appear in the forum soon.
Example: $50 bi-weekly to your RSP/IRA account and put into mutual funds, bi-weekly payments (instead of monthly) on your mortgage, not using credit to pay for routine expenses (unless you pay them off at the end of the month), strategically putting money into an income property at the right time (while holding onto your principal residence), these and many other actions will take you toward wealth.
But it has to be a lifestyle and it has to be done for the long term. This doesn't mean you suffer and deny yourself, it means YOU HAVE TO AUTOMATE EVERYTHING ABOVE in order to make it easy to do it. A major secret to building wealth is to make it automatic, because it mainly consists of boring actions that are easy to forget or not consider important.
Very few people could or would take the care to make an extra mortgage payment every few months or invest $50 into an RSP each paycheck. They would say they don't have the money and they simply would not remember to do it.
That is why you take these things OFF THE TOP and arrange to have them deducted from your bank account BEFORE YOU START SPENDING your paycheck. And your paycheck is automatically put into your bank account too. You set it and forget it and let the organized system do the work.
Mastering
your IRA/RSP, a No-brainer
You don't want to fiddle with your RSP every week and study for hours
on end to try to pick the right stocks to invest in. Plus not even the
BEST stock pickers can beat the markets! So you put it all on automatic
with your $50 or $100 or whatever you can afford coming off each
paycheck and going into your RSP/IRA. That AUTOMATICALLY purchases mutual funds that are assigned by your bank manager based on your risk tolerance (found by a survey you filled out earlier) and you just end up buying more of the same funds each week on and on. You DON'T have to time the market and you DON'T have to sit there and figure out what stock to buy. Your account just buys more and more. When the price is higher you get less shares and when it is lower YOU GET MORE SHARES AT A LOWER PRICE, which then rises again, adding to your net worth. This is called 'dollar cost averaging' and is done OVER YEARS, not by trying to beat the market.
After 10-20 years you can be into the six figures like this in your RSP - compounded tax free - AND WITHOUT DOING ANYTHING except increasing the amount you put in once in a while. Consult your financial advisor or banker to set up a retirement plan if you don't already have one.
Mastering
Real Estate as a Road to Wealth
There is not just one way to do this but here is the simplest way I have heard: buy your own home, live in it for years, pay it off, sell it and retire. Another way is to buy a home, live in it for some time, pay it down and increase your equity, then upgrade and repeat. You eventually own more and more house. Another way is to buy a house, live in it for a while, buy a second one KEEPING THE FIRST and renting out one of them. The rented out one pays for itself and the other you pay for as you would anyway.
There are many things you could do, the point being YOU HAVE TO LIVE SOMEWHERE, you might as well own the place you live in and use it as a springboard to increase your wealth.
There are excellent books on this subject and these will be covered on the forum. They give you the full concepts and strategies and basics so even a kid could do it. In fact, some kids ARE doing it! (with their parents signing the legal documents after verifying all is well).
In both real estate as a homeowner and in building your RSP as above, TIME is a major tool for you. So is compounding. You don't get rich quick but you can get rich slow and without significantly changing your lifestyle. The real point is that you will notice these actions are BORING. That is the correct emotion for much investing once you have your SYSTEM and that is why you AUTOMATE EVERYTHING.
Investing is NOT an emotional issue! When it is, IT IS LIKELY BEING DONE WRONG. The herd mentality buys from emotion when someone pitches A GOOD DEAL and SELLS ON FEAR when they are afraid the market might crash or when it has already crashed. They are afraid (emotion) to 'miss a good deal' (buying from fear, not from a system). They are afraid to lose more money (so end up buying higher and selling lower, the opposite of what investment needs to be doing).
Investing to get wealthy is done over YEARS and DECADES and through market cycles. Market cycles ALWAYS go up and down. You have to get educated on how to ride the waves of the market cycles and USE THEM, not be a victim of them. As always, applied knowledge is power, and in this website the intention is to connect you with that power so you can eventually acheive your goals.
"Don't wait to buy real estate, buy real estate and wait." (Robert Allen)