A few years ago, I was sitting at my desk in my job office. I started to think about the differences between someone like me working in a full-time job doing the 9-5, and other rich, successful people. So I thought I was just not smart enough to be that rich. Little did I know, but the truth is I was completely wrong. If you think you are not smart at something, you can get that smart.
Rich people know that you can never get rich by trading your time for money. The secrete is to build passive incomes.
The formula is simple:
- Start a hustle and work hard on it.
- Build it to success and then automate it.
- Start new hustle and repeat until very rich.
So, if the secret to getting rich is so simple, why do so many fail at doing it? and why so many are ignorant of this fact?
It requires skills to achieve financial freedom because you have to build passive incomes to get rich. It is called Financial Literacy. And Just like with any profession in life, you have to study Finacial Literacy first before practising it. For example, A lawyer must study law before he can practice it.
Therefore, you have to educate yourself first before starting investing and building passive incomes. You can learn more about financial literacy here.
The issue is that you never had financial education in your school or university that got you to the level of investing and buying assets like a pro. Mostly, you think of building assets as side hustles or quick fixes that will never replace or be as important as your full-time job.
The educated investors do the opposite. They start a hustle and build it up while keeping their current full-time job. When it gets successful enough and starts earning double their current income, they pursue it full time.
The best way to get financially literate is to start reading finance books. You can keep reading blogs or watching youtube videos, but the best way to do this, as it has always been, is to take the knowledge from the people who have succeeded at one of those investment vehicles. The Good thing is that they are willing to share their knowledge with you for the low price of $20.
It would help to read a few books to understand the stock market deeper. You can check my book collection here. Here are a few recommendations for stock market beginners you can buy on Amazon:
Moreover, do you want to know what you should invest in? Where to keep your money? and what is the most profitable way? And how you can become rich?
What Milionares Invest Their Money In?
Millionaires invest their money in companies; they are either the founders or owners (aka shareholders). The fastest way to become rich is to put your money in companies you believe in and understand their mission. In addition, you have confidence in the company’s competitive advantage and that it can be in the market for the next ten years.
This is the mentality of successful investors, such as Warren Buffett, the CEO and chairman of Berkshire Hathaway and the richest investor on earth:
Rule 1: Never lose money
Rule 2: Never forget rule one
Warren Buffett
But you think that the stock market can be risky and that you can lose all your money, while that can be true if you did it without any strategy or knowledge. That is what financial literacy is for; it prepares you to make financial decisions without mediocre mistakes.
We can begain to separete gambling from investing not by the type of activity (buying bonds, buying stocks, betting on the horses, etc.) but by the skill, dedication, and enterprise of the particiapant.
Peter Lynch in his best selling book “One Up On Wall Street”
The world most successful investors believe in buying great businesses at a sale price. They buy 50 cents for one dollar and hold their position in the company for the long term. They only sell when the business has lost its competitive advantage, or it has become overpriced.
What Is The Most Profitable Thing to Invest In? Stock or Property?
The richest people are owners of companies. While it is true that you can get rich building a real estate portfolio, the richest real estate investor is not even among the Top 20 reachest people worldwide. David & Simon Reuben are the richest real estate investors with a net worth of $18 billion and rank 65 as the richest people worldwide.
While the richest person in the world is Jeff Bezos – Amazon founder and former CEO with a net worth of $188.5 billion at the current time of writing.
Where Do Milionares Keep Their Money?
Millionaires tend to diversify in their investments. However, they do not put all their money in a bank account. The Bank will pay you interest that can hardly keep up with inflation, and mostly it does not. If you leave your money in a bank account for 10 years, your purchasing power will decrease.
Because of inflation, $10,000 in 2010 is worth $12,081 in 2020, which means inflation is reducing the value of your money if you have left that amount uninvested. However, if you leave $10,000 in an index fund earning a compound interest of 10% for 10 years. That $10,000 will be $25,937.
Therefore, you can become rich by creating an investment portfolio such as stock, bonds and property. Stocks have the highest return on investment. The S&P 500 has returned a historical annual average return of around 10%. Your ROI can be even higher if you invest in profitable companies that you could buy on sale and sell when the stock price hit the highest.
The Bottom Line
Although no one can predict the market, it has not stopped successful investors from averaging an annual return of 20%. The way it is to buy a business you can understand, it can be your favourite restaurant or your shoe shop. Everyone has a niche in the stock market. If you work in a particular industry, that is your niche.
Every industry has good and bad companies. Your niche will help you distinguish between winners and losers, making your portfolio unique compared to others. My advice is to learn how to use your niche to your advantage and do not copy others. If you are interested, I wrote a guide to help you invest in the stock market; you can check here.
