If you want to get rich, start investing and start as early as you possibly can.
“Becoming rich is nothing more than a matter of committing and sticking to a savings and investment plan,” states financial adviser Matthew McCabe.
“You don’t need to have money to make money, you just need to make the right decisions — and act on them.”
To illustrate the simplicity of building wealth over time, McCabe created a chart (below) detailing how much money you need to set aside each day, month, or year in order to have one million dollars saved by the time you’re 65.
The chart assumes you’re starting with zero dollars invested. It also assumes an 8% annual return.
The simplest starting point is to invest in your superannuation, points out McCabe, he says, “consider contributing money towards your superannuation fund that will support in accumulating wealth in a tax effective manner.”
While the numbers in the chart below are not exact (for simplicity, it does not take into account the impact of taxes, and an average rate of return 8%), they give you a good idea of how coming up with a couple of extra dollars each day can make an enormous difference in the long run, particularly if you start saving at a young age.
Next time you consider running to the cafe for a $4 latte, think about this chart and consider redirecting that coffee cash to your savings:
|Starting Age||Daily Saving||Monthly Saving||Yearly Saving|
Before investing, McCabe suggests taking a step back and considering what your purpose is. The reason to create a purpose is to ensure that you understand what truly matters to you. It allows you to have a greater understanding of what drives you, why you are going down this path, and avoid potential mistakes along the way.
However, becoming “rich” or a millionaire is only an enabler. McCabe explains, “when we speak about someone’s purpose, we don’t mean “I want to be a millionaire”, as whilst that would be nice, the goal to “be a millionaire” doesn’t resonate too strongly with most. But rather, the ability to do things once you become a millionaire is what it is all about, for example spending more time with your children and family, spend more time travelling discovering the world, or maybe it is to travel with your favourite football team to watch all their games.
Money is not the goal, it is an enabler.