8 secrets of the wealthy
Learning from other successful financial advisors and what they do with their investors can be a helpful guide.
Finance expert Ric Edelman reveals the secrets of the rich and how you can find extraordinary wealth.
- They carry a mortgage on their homes even though they can afford to pay it off. Keep your money working for you. Every dollar paid to the bank is one less than you have to invest. Your house will grow in value no matter what.
- The wealthy contribute the maximum allowed to their employer retirement plan or RRSP.
- Most of their wealth came from investments that were purchased for less than $1,000. It does not take a lot of money to make money. A small amount of money (even a dollar a day!) invested over a long time will yield large returns.
- They rarely move from one investment to another. Buy quality investments and hold on to them for the long term (longer than five years). Don’t check your investments obsessively. Most wealthy investors check their accounts by monthly or quarterly statements, not online daily.
- They don’t measure their success against the TSX, Dow or S&P 500. These indices are meaningless. Do you truly know what they stand for? Track your own goals.
- They devote fewer than three hours per month to their personal finances. Making money should not take a lot of time studying and planning. Once you’ve done your initial research, don’t look!
- Money management is a family affair. Don’t make money a taboo topic. The earlier you start talking about finance with your kids, the better. Tax your child’s allowance; he or she will learn to appreciate how money is earned. Set the “taxed” portion aside in a mutual fund that will mature when he or she is nineteen.
- They don’t pay attention to the media. You don’t need lots of information to be successful. The media have to sell magazines and gain readership, so they must continually present new stock tips. They’re not in the business of giving you the same financial advice each day. The media focus on the moment; you don’t need to hear that.