The end of financial year will soon be upon us. But once you get past…
Get Rich Quick Steadily
Everyone would love to get rich. Now, the problem with getting rich isn’t WHEN, instead it is HOW, a factor that has given birth to thousands of ill-fated Ponzi and other Get Rich Quick schemes. The reality is that there’s no secret or magical formula to get rich instead it is achieved over time with dedication and commitment. Forget getting rich quick, getting rich steadily is the key.
Utilise Compound Interest
Compound interest is an incredibly powerful tool used by savvy and judicious investors. Compound interest is when you earn interest on both the principal (the original amount of money) and the accumulated interest already earned from previous periods. Compound interest means you earn interest on interest.
If you put $5000 into a bank account paying monthly interest at 5% p.a. for a period of 10 years, at the end of the term you would have $8235. The first month you earn $20 interest on $5000, the second month you earn $21 interest on $5020 and in the third month you earn interest on $5041 and so it grows.
Compound interest works even better if you make additional contributions to the account regularly. Using the example above, if you added $100 per month to the account, at the end of the 10-year term you would have $23,763.
An online savings account that pays monthly interest is an example of an account that earns compound interest.
Timing Is Key
The earlier you start the better when it comes to getting rich steadily. Since compound interest is pegged on the ‘time factor,’ the longer you let your investment grow the bigger your returns become. So, if you time your finances and start investing right now, by the time you retire from 9-5, you could have a healthy nest egg without ever breaking into a sweat! Even with a modest deposit of $1000, if you contributed $50 per week, a compounding interest account earning 5% p.a. could yield $170,919 over 30 years. The key is to start now.
A great calculator to use which highlights the power of compound interest can be found here:
Save Don’t Spend
Hold yourself to account. Be strict. You decide where your money is spent or saved – so choose wisely. In short, learn to save and make it a habit. Nobody ever gets rich by being a consumer. If you choose to save, you will steadily edge closer to being rich.
Say No To Any Form Of Debt
You will not achieve financial independence if you still have a debt to settle. Bad debt; say credit card debt, can grow quickly and eventually consume your savings if not managed correctly. As a general rule, stay away from any liability, especially those that attract interest.
Education is a way of investing in yourself. It can make you more valuable in the workforce and increase your earning potential. Education can enrich your life both intellectually and financially and can help you get rich steadily.
Looking after your finances can be complex and time consuming. Getting help from a Certified Financial Planner can help you make appropriate decisions for your financial circumstances. They can help you achieve your goals whether they be to get rich or save a house deposit. Getting quality advice, tailored to your needs will put you on strong path for success.
Unfortunately, there are no easy ways to get rich quick. It takes time, perseverance, and commitment. Use compound interest, start early, avoid debt and you’ll be steadily on your way to getting rich.
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