Many people believe that buying stocks is how to become a self made millionaire. Stocks have their place on the road to wealth, that's true. But most truly wealthy people don't just own stocks; they own real estate, businesses, companies, and natural resources. They control their futures because they control their assets. They know how to make money, and they know that passive investments just aren't enough.
Talk to any seriously wealthy person. They'll tell you that their assets are diversified across many sectors. They might also mention that they control their risk strategically when choosing investments, by following rules carefully crafted to protect their money. Following these rules means passing up tempting opportunities sometimes, but rich people know it's better to manage risk. There are always other opportunities.
If you are serious about wealth, you'll learn to follow some rules, too. Your rules will help you decide:
1. What investments you'll make, and what you'll pass up
2. Exactly how to make investments
3. What you need to get started with your investment
4. Who to involve in the deal
When you sit down to make your money rules, you'll want to look at some of the secrets of self made millionaires:
Your Current Reality and Financial Goals
You can't invest money you don't have, and you can't even invest all the money you have. Once you've figured out how much you can risk, though, your rules might push yourself a little bit out of your comfort zone. You'll be sharp and alert, and in the best state for learning out far beyond where you're comfortable, because it's in this area of discomfort where you'll be driven to make sharp decisions and where you'll find the best deals.
In order to figure out the best money investing rules for you, you need to know where you are now and where you're going. Just like finding your route on a map, you need your start point and an end point to find a path between them. Once that's set, your personalized rules will help you continue to move steadily toward your goal, while still giving you some room to follow hunches.
Return on your Investment
You will want to develop goals for the return on your investment, both for cash-flow investments and appreciation. You'll first need to know how much money you need to have available to you monthly, and then evaluate how much you want your net worth to appreciate over the next few years. An investment creates wealth, whereas keeping money in a bank avoids risk.
Cash Flow and/or Appreciation
Do you want your investments to bring you growth or income? Evaluating your finances today will help you decide how much money you need, and how much growth you can afford to pursue. When you evaluate investments, you can check to see how they fit with your needs for cash or growth, or both.
For example, perhaps you wish to invest in rental property, or dividend-producing stocks, or perhaps you wish to put your money into natural resources. Maybe you don't want more cash in the house, but would rather concentrate on growth instead. In that instance, you would do well to look for land that is likely to be developed in the future, but will tie up your immediate cash. An example of this would be an undeveloped lot next to a lake in an area that is just beginning to experience growth.
Your Income--Active of Passive?
The final step in deciding how to invest your money is choosing whether it will be active or passive. If you choose "active", you will be involved in the investment in some capacity and in helping deliver returns. If, however, you decide to invest it passively, you will provide the money and then leave it up to the managers of the fund or project to make money for you. Either way you choose they both have the capacity to make a million dollars for you.
However you decide to invest your money, it's up to you to make the choices that will create your future. The assistance of a wealth coach will make these choices easier, and help you avoid many common mistakes. Having a wealth coach is one of the top secrets of self made millionaires. When you and your wealth coach make your money rules, you will then be able to choose the exact path for you that feels right on how to become a self made millionaire - and from there it will be easier for you to achieve it as well as go through with it!
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