There are plenty of people out there who want to tell you what to do with your investments. But few offer any help on how to accumulate the money in the first place. That’s all going to change right now.
Regardless of your starting point, accumulating assets is within your reach. It takes work, diligence and patience but you can achieve it. How do I know this? I’ve been in wealth management business for close to 30 years and one the richest men I ever met started out as a garbage collector for the City of San Leandro California. He started off slowly of course. But he saved and invested every year and he made it a priority. When I met him he was worth over $10 million – and he was still driving that truck.
I can’t promise you the same results as our esteemed garbage man. But if you start off on the right track and give it time I can guarantee that you’ll be amazed by your results. Let’s get to work.
In order to achieve a goal you have to be crystal clear on what it is. Let’s say you want to retire at age 60. How much it will it cost you to live at that time? Where will you retire? What will you spend your time doing? How much traveling will you do? Where will you go?
Of course you can’t answer these questions with absolute certainty but do your best to identify as much detail as you can about your future goals. This will help sharpen your commitment because you’ll know exactly what you need to do and why you need to do it.
The next order of business to take care if you want to build your portfolio is to start tracking how you spend your money. This is important because once you are clear on your goals and priorities you may decide to spend your money differently.
For example, if you know you need to save $5000 a year on top of your 401k contributions in order to retire by age 60 (your #1 goal), it may be easier for you to decide to skip those morning designer coffees at Starbucks or pass on that weekend to Vegas.
I’m not suggesting that you deprive yourself today in order to have the future you want. I am suggesting that once you are clear on your goals and track how you spend your money, you may start feeling differently about your current spending.
In the point above I asked you to assume that you needed to save $5000 a year over and above your 401k in order to achieve your mission. It’s super important to attach a dollar figure to your goals so you can take concrete steps towards accomplishing them. The best way to determine what those numbers are is to run yourself a financial plan. You can either do this yourself or hire a professional to do it for you. Regardless of how you create your plan, you need a road map that details exactly where you are today, where you want to go and how you are going to get there.
This was the secret sauce that helped my garbage collector become so successful and it can help you too.
Your plan will help determine if you are on track to achieve your goals or if not, what you have to do in order to get back on the path. Don’t deprive yourself of this priceless tool.
Once you’ve identified your goals, put a tracking system in place and created your plan, the rest is easy. All you have to start investing. I’ve written an entire post on that subject and I suggest you read that for more detail.
Investing may seem like a daunting task but if you follow the steps I outlined in that post you’ll find it really isn’t that difficult. All you have to do is understand the difference between long and short term investments familiarize yourself with the pros and cons of each, identify how long you want to invest for and take action.
For people who want to build their portfolios as quickly as possible, I always suggest automating their investments. Get set up to take money right out of your paycheck and deposit it into the retirement plan at work. Next set up an autopay plan to take money right out of your bank account each month and deposit it into your investment account. For me, this is a no-brainer. It forces me to save, invest and cut my spending (since I take the money out of my account at the beginning of the month…..I can’t spend it).
You can build your portfolio if you have discipline and a little patience. I’ve seen this work for many people. Do you think it would work for you? Why or why not?