Time in the market beats timing the market. That is one of the most famous things ever said by Warren Buffet, and it's still true today. As the world's best investor, he knows a thing or two when it comes to the economy and where to put your money to good use.
With all of that out of the way, let's dismantle the first sentence and see how it can change your life for the better. For starters, investing is something that everyone should do. The earlier you start, the better. Click on this link to find out more.
There are more benefits than you can count, and it's one of the basic steps if you want to secure your finances in the future and become wealthy. Of course, almost no one will become as rich as Buffet, but that doesn't mean that we can't use his wisdom to make more money than we could.
When you get a job, you're young, and the last thing on your mind is putting some money aside for the future. Plus, at the time of your first job, you reach the legal drinking age, and a party on Saturday night seems so much better than putting a hundred bucks into an IRA.
Everyone's been through that period. However, the youth should always learn from the mistakes of their elders. Sure, you can go out and still have fun by drinking on a Saturday night. You can do it for the whole weekend. But instead of drinking five beverages, try drinking three.
Take less money with you, and leave your credit cards at home, so you don't overspend. This is one of the best pieces of advice for anyone in their teens up to their mid-twenties. Next comes creating a 401k. After the partying is all said and done, you move on to a better job.
At that time, the thing on your mind is probably how to get rid of your student loans. That's a problem that's going to be over your head for quite some time. Still, that shouldn't discourage you from creating and investing in a 401k.
Everything you put aside will be matched by your employer. This means you're saving double. That helps you to be way ahead of inflation from most of your peers. If you don't put your money to work for you, its value will diminish in a couple of years.
The average inflation rates are usually 2 percent, and once in a while, they can rise to 3 percent. However, if you look at the government spending, it can be close to 5 for the following year or two. By putting your money in a safe place where it can achieve the snowball effect, you're going to enhance the value and be in a surplus.
How can that build wealth?
Compound interest has created more millionaires than real estate, stocks, bonds, and startups combined. That's a fact. Investing in a stable IRA, which is based on precious metals, will be the best thing you do in your life.
The rich invest their money in IRA rollovers, whereas the poor don't. Of course, there are a plethora of options that come when you want to grow your money. The first thing you need to do is develop a strategy and find a fixed amount that you can set aside every month.
Being consistent for 40 years with 400 to 500 dollars each month can make you a millionaire with an annual interest rate of 7 percent. It's that simple. Here's a simple calculation. Let's look at a thousand dollars that you can set aside this year.
With a rate of 10 percent, over a year, you will have 1100 dollars in your account. The next year, that number is going to be 1210. The year after that, it's going to be 1330. If you wait 40 years, those thousand dollars are going to become 45 000. That's why all investors and economists call compound interest the eighth wonder of the world.
Putting your money into a traditional IRA, SEP-IRA, or a 401k gives you a lot of tax benefits. First of all, you don't pay taxes for the year you invest. Instead, the only time you are taxed is when you take the money out of the account.
This means that for the next 30 or 40 years, you're going to have a lot more money to save. Plus, the entire system has a lot of loopholes that will benefit you. That's why people like Jeff Bezos and Bill Gates maintain their wealth.
You need to find a way to beat the system, and the way to do so is to mimic the ones who already have it figured out. Finally, creating this habit and sticking to it will help you achieve other financial objectives too.