I’ll Share This Investing Tip Until I’m Blue in the Face

The core of any successful personal finance strategy can be boiled down to nine simple words: “Spend less than you earn. Invest the rest. Repeat.” People who follow that guidance are far more likely to wind up as successful investors than those who either cannot or do not.

It sounds simple, but it is incredibly powerful. Indeed, I’ve said it before, and I’ll say it again. In fact, I’ll share this investing tip until I’m blue in the face, because it is simply that fundamentally important to anyone trying to improve their personal financial situation.

Image source: Getty Images.

Why it’s so powerful

The reality is that successful investing can be an incredibly simple process. Simply sock away what you can every payday into a broad-based index fund, and chances are really good that you will beat the vast majority of professional money managers over time. The hard part of building wealth isn’t the act of investing, it’s coming up with enough money to invest on a regular enough basis to make real progress toward your goal.

After all, no matter what rate of return stocks earn, $0 invested in the market will always compound to be worth exactly $0. Yet investing just $5 a day throughout a career can potentially be enough to get you from $0 to millionaire status by the time you retire. You don’t need to be a financial genius to make it work, but you do need the discipline to make tough priority calls and the patience to stick with it for decades.

Especially in today’s era of high inflation, coming up with even a little bit of money to invest each month is something that’s easier said than done. Still, those inflationary pressures make it that much more important to try to find ways to squeeze costs from your monthly expenses. After all, every dollar in your current spending budget is a dollar that remains exposed to future inflationary cost pressures. By figuring out how to live without it, you also eliminate any future escalations it would otherwise bring.

How to get your…

Read complete post here:
Source link