Study how to be rich. Read books. Go to seminars, buy get rich schemes.
This is completely correct. Except for the last two, of course.
Life is like a box of chocolates. Most of them taste like shit. Too much information, too much bad information. How long did it take you to find this site? Were you lucky? Did someone show you the error of your ways in doing machines and cardio and standing on bosu balls? Or did you realize that what you were doing was not giving you the results you wanted, and you dug until you found what you were looking for?
You can be lucky in wealth. There are levels of luck. Odds say you won’t just walk into wealth.
You should not take what I say as canon, though I’m wealthy relative to the amount of time I spend trying to be so, and you should not take what anyone else says as canon. What I’m going to do, because I have a tremendous amount of free time on my hands and I’m feeling like I should be helpful (rare), is give you recommendations that will set you on the most stable and proven path.
I can’t make you follow the path, but I can show you where it is, and maybe entice you to go down it by strategically placing small pieces of ham leading down the path into the distance.
My recommendations might be terrible, just like any recommendation you might be given. If you don’t take what I write with cynicism, then you’re fucked because you’re probably not going to do it with anyone else.
I’m also going to start with you as if you were a blank slate, incase anyone else chooses to read this drivel. You pick what applies to you, but you never skip a step if you haven’t completed it.
You need to start with a basic understanding of economics. I am horrible at math. Bad, awful, couldn’t divide my way out of a paper bag much less understand the geometry of the thing once I was inside of it. Math is not necessarily economics. Understanding economic principles does not involve an understanding of mathematics so much as an understanding of the processes and habits that drive economic theory.
Read Naked Economics: Undressing the Dismal Science first.
Wealth, wealth you build as opposed to wealth you are given, is like a really fucking tall thin ladder made out of Donald Trump’s hair. It’s not sturdy, and it smells kind of weird, and it’s probably some kind of dead animal. I guess you can eat it if you’re trapped in the wilderness and waiting for rescue.
What I mean to say is that you have to start off as sturdy as possible, because the further you go up the ladder the more relevant your beginning will become. You can float cash forever, but it won’t mean you’re rich. I drive a Corvette, a neighbor drives a Arnage. Which one of us has more money? If you guessed him, you’d be wrong. There are ways to float money you don’t have.
I’ll preface it with this important message: PAY OFF DEBT NOW (unless you’re me and you hold debt on purpose but you’re not me so don’t do what I do okay)
I probably should have left that last part out because I think it weakened the message. Oh well.
Your first step, in anything, is a 1-2 pay check cushion in your checking account. It is not even a cushion. You look at it as your minimum. You make $900 a week? Your checking account minimum just became $1200. Each time you go below that I’ll hit you in the face with a brick.
Then, a savings account. Always a online bank. You can have a discussion of a monkey market account later, CDs are always shit (I’ll argue this with anyone and they’ll lose), but you need to have liquid savings. Why? Aaaa-Congratulations! Hack Wilson just ran you over in the street in his Mercedes because he thought you were an inconsequential plebian. Do you have the emergency funds to pay for hospital treatment of your broken pelvis if you’re having an issue with your insurance?
What do you want your savings to be? You’re laid off. Hack Wilson broke your pelvis. You don’t get a job for 6 months. How much would you need to live for 6 months without an income? That’s how much needs to be in your savings account.
Your third task, if you choose to accept it, is a retirement account.
And, your second (and third, and fourth…) book.
You’re going to read The Four Pillars of Investing by Bernstein, or a Random Walk Down Wallstreet by Malkiel. Whichever you choose doesn’t matter, I prefer the Four Pillars but it’s a harder book to read. You’re going to follow up either book with Common Sense on Mutual Funds by John Bogle (don’t take all of Bogle’s book at face value, but use it to readjust your thoughts on the stock market).
From there, your employer (you own a business, I’m speaking in generalized terms) will provide you with something under most conditions, and if they offer dollar matching on that account it’s imperative you max that out. It’s free money. As to what they’re investing in for you, well, you sure as hell shouldn’t be in a money market account, and that’s all I’m saying. There are too many variables for me to get deep into it.
Since I’m going to gear this a little to my experience, I don’t have an employer sponsored retirement fund. You follow the recommendations of Bernstein towards the end of his book based on allocation for the point you’re at in your life. I have a way of doing things, but I make a fair portion of my money off of this, whereas you’re creating a base for wealth.
Yeah, you’re not rich, and I probably have you putting down $15 grand already ($4,500 into a Roth IRA by April 15th, a few thousand into your employers retirement fund, a few thousand into a savings account, a couple thousand in a checking account). You’re not wealthy. You haven’t even started on the path to being wealthy. You haven’t even poured the foundation, though I just helped you to buy it.
Might as well pour it assuming you’ve reached this point, though.
You’re going to go read the fifth edition of Investing in Real Estate, you’re going to buy Property Management for Dummies, and you’re going to read (I said read, not buy) Buying a House for Dummies. If you can’t see where I’m about to go with this then you have bigger problems than wealth. Some form of cognitive impairment. Is there a fork sticking out of your forehead? Did you jump into a pool that had been drained? Are you taking Xyience products? Do you think Britney Spears is still smokin’ hot? If the answer to any of these questions is yes, speak to a neurologist immediately.
So, uh, go get 30 grand and buy a house. While continuing to contribute the maximum to your IRA and your work retirement fund. Already have a house? Buy a second one. It’s what I was going to have you do after you bought your first, anyway.
Why? Why. Why, why. Why would you buy a second house when you already own one? You’re not a real estate investor, you don’t even necessarily want to be a real estate investor. Why? Because you’re going to make money off rent for 30 years to supplement your income. And by the time you’re about to retire, you’re going to have an additional $150,000 of equity in that house and you can refinance and continue to rent it or sell it. Helpful, no?
From there? I don’t know. You sure as hell better, though. You’ve got two houses and upwards of what- 30, 40 grand in retirement accounts? Better not fuck that up, you know?
Do what you want, because you’re going to be informed by the time you get, in real life, to the point I’m pushing you to at the end of this post. Real estate investor? Enjoy getting sued. Constantly. Are you going to become a day or swing trader (good luck with that, princess)? I don’t know, and you won’t know until you find what you like. What you will find is that you’ll be retiring with over a million dollars and two houses, and that may be enough for you.