5 Ways the Wealthy Stay WealthySubmitted by Moneywatch Advisors on November 1st, 2021
Steve: This article appeared on Forbes online on Oct. 20, 2021. As it is almost as good as something I would write myself, I thought I’d share. The link to the story is at the end.
Ever wonder how the wealthy stay wealthy? For one, they don’t just leave their money sitting around in some savings account. Here’s what they do with it instead...
1. They have a financial plan with milestone goals.
First things first, people who sustain wealth are able to do so, often, because they put financial plans in place. This means, at one point in time, they considered where they wanted to be. They envisioned this wealth for themselves. Whether you make a five-year plan, a 10-year plan or longer, making a plan is key. A financial plan helps you to hold yourself accountable and remember your “why,” which can continuously serve as inspiration for you. Setting up shorter-term milestone goals can also help keep you motivated along the way.
2. They invest their money.
People with hefty amounts of savings don’t necessarily have that savings because they left it sitting. More likely, they have it because they invested it. While there are certainly risks involved when it comes to investing, the average annual return on investments is 10 percent. (Note: Forbes probably means returns before inflation) This means that your money can make a lot more money when it’s invested than it ever could in a traditional bank account. So, the risks are worth it, given the potential rewards.
3. They don't wait around.
The reality is that most people have debt, and most people are stressed out by the thought of their current or future financial situations. But wealthy people don’t put off investing until they feel like they have enough to make a dent. They start somewhere. And that somewhere ultimately leads them to somewhere else bigger and better down the line.
4. They don't pull their money out of their portfolios right away.
While volatility can be stressful, the people who make the most out of the markets don’t sweat the swings. They understand that what goes up must come down, and vice versa. The economic cycle is called a cycle for a reason, after all. So, rather than impulsively buy and sell when they’re feeling emotionally triggered, they give their portfolios time to perform.
The long-term ROI of investing is ultimately promising, despite what might be occurring in the short-term. And investing in diversified strategies (not stock picking!) can give you an easier time navigating inevitable volatility. Diversification limits your exposure to any one asset class or industry so, should one plummet, you have other securities to stem the tides.
5. They leverage the help of professionals.
Of course, the world of money management is complex and nuanced. It’s not easy to stay abreast of trends and ever-evolving market movers, and most people—even wealthy ones—don’t have access to the coveted resources necessary to stay ahead of the game. That’s why smart investors (those who also tend to do well) call in professional help from financial gurus.
Here is the link to the article: https://www.forbes.com/sites/qai/2021/10/20/5-ways-the-wealthy-stay-weal...