You wish to become a millionaire one day, don't you? But how? While winning the lottery is one way (my advice is don’t bet on it), I'm sure the chances of you becoming a millionaire in other sensible ways are higher. Some people work hard to climb up the corporate ladder to earn their million-dollar salaries, while others work hard to build their million-dollar businesses. There are also people who achieve massive financial success through investing in stocks, investing in properties, setting up online businesses, writing books, developing software, and inventing new products for commercialization. The list of possibilities is endless.
To become a millionaire isn't impossible, provided you plan for it and work hard at achieving it. The truth is any ordinary people can have a chance to be a millionaire. You don't need much money to start off with, just a healthy dose of discipline and commitment. If you follow a simple 4-Step process diligently, your probability of becoming a millionaire eventually are high. The steps are:
1. Earn More Money
Sound like common sense, isn’t it? Apart from your active income which is commonly derived from your job, you'll need to find ways to earn passive income. Unlike active income where you need to work to earn it, passive income is money that comes to your pocket without your active participation. Rental income, royalties from books, licensing fees derived from your products, and online revenues generated from your website are some examples of passive income streams.
2. Save More Money
You need to spend less than what you earn. Lead a frugal live and live well within your means. If you’re the majority that earn a reasonable income and live within your means, you’ll likely have money left over to save. There’s no need to keep up with the Joneses. Don’t be caught up with materialism. It might look good to be spotted driving that sparkling Ferrari, wearing a dazzling Rolex watch, or carrying the latest Gucci handbag. However, it is extremely costly to "act" rich. Doing so only makes you look like a millionaire rather than being one. It's pointless if your net worth doesn’t reflect you as a millionaire. Don’t get me wrong, I'm not against branded or luxury goods. If you can comfortably afford such luxuries, by all means go ahead to enjoy them. Otherwise, it's wiser to save the money for investment. Living reasonably well without putting an extra strain on your finances will leave you with extra money to invest to generate more income.
Learn to pay yourself first even before paying your bills. Making your monthly saving automatic is a good idea. Set up a new savings account and instruct the bank to automatically transfer an amount from your earned income to this saving account every month. This new account is not meant for spending purposes but to be used for future investments. It is okay to start small in the beginning. The key is to get started!
3. Invest Wisely
Merely putting your money under your pillow or leaving all your money in the savings account won't make you rich. Many a times, the interest earned is far from being able to offset the inflation rate. This means that your money in the bank would slowly erode over time and thus, reducing your purchasing power. Not investing your money would also mean that you'll become poorer as time goes by. Therefore, make your money work harder by investing it to generate higher returns. Carefully study the various investment options such as stocks, mutual funds, properties, commodities, among others. Each investment instrument offers a varying degree of risk. Know your risk appetite before you select a particular investment vehicle. Importantly, don’t fall for any get-rich-quick scheme. If the investment sounds too good to be true, it probably is. Investment should take a long-term horizon, so never speculate for risky short-term gains. Rather, invest wisely and regularly for the long-term. Don't be too ambitious but set a reasonable target for your return on investment (ROI). In my opinion, a consistent ROI of 8% to 12% is realistic and achievable.
4. Keep Repeating the Process
The final step is to keep repeating Steps 1 to 3. The more money you earn and save, the more money you’ll have at your disposal to invest in assets that yield high returns.
So you want to be a millionaire one day? Yes, you can. I've done it, so I know for sure it's doable. If you stick to this simple 4-Step process and work at it faithfully, your wealth will grow much faster than you realize. I hope to see you joining me in the millionaire club one day!
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