T.I.P.S. to Building Wealth
'Think' of your money as a vessel for growth.
- Buy things that:
---appreciate in value - investments (stocks, crypto)
---hold their value - real estate (homes & land)
---or have little depreciation - buying used cars depreciates less than buying new ones
Obviously this is over the long term and subject to a ton of caveats. Do your homework before investing or buying anything! Please.
- Don't confuse sentimental value with market value
---Sentimental value is the emotional value that you place on an item.
---Market value is the monetary value the market places on that item.
Just because you think your kitchen is worth $10,000 more because you spent that amount to remodel it, doesn't mean prospective homebuyers bidding for your house will think that as well.
'Invest' in things you understand.
- If you invest in things that you understand, you will have the long-term conviction to stick with that investment. And you won't sell it at the first sign of trouble, usually at a loss. As Warren Buffett also advised, "If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes.”
'Protect' your money and assets.
Diversify your Investments -- Not all investments are created equal. And sometimes you could be wrong about the potential of an investment. Diversification protects you from arrogance and ignorance.
Buy insurance -- As your assets grow, so should your insurance that protects those assets. You never know when the next natural disaster; car accident; or health emergency will set you back financially. Make sure your home, auto and health insurance match your assets; plus an umbrella policy for the extras.
Don’t forget to have 3 to 6 months of emergency savings -- You want to be using cash for an emergency, not debt.
'Spend' less than you make = Make more than you spend.
Have multiple streams of income -- do what you love and provide people with what they love. Plus, buy assets that pay dividends (stocks, crypto, real estate, etc...). Do your homework please.
Don't fall for the Discount Hustle -- Only buy things ‘you need’ on discount. Don’t buy things ‘on discount’ thinking you need it.
Limit and eliminate debt -- Debt saps you of your future income, and income is a major component of building wealth.
Don’t be seduced by Lifestyle Creep -- Just because you make more, doesn't mean you spend more.
Do you have anything to add? Stay financially frosty people.
Thanks for reading.
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