This is a three-part series on how to make your next million dollars. The key to doing this is PLANNING! There needs to be a “savings” line item in your monthly budget. Unfortunately too many investors are not saving much, if anything at all.
- Part 1 of the series discusses the key behavioral trap investors fall into that prohibits them from reaching this milestone.
- Part 2 describes the assumptions you need to consider when calculating how long it is going to take you to get to that next million.
- Part 3 describes the keys to starting on the path to becoming confident in your retirement plan.
PART 3: Keys for Savings Success
- Start saving now. Today.
- Set a realistic goal based on your needs.
- Live on a strict budget. If you don’t have your spending under control, you won’t be able to save what your need.
- Live below your means. It’s the only way to ensure you have enough money to save.
- Pay yourself first – before you pay your bills or anything else. If you are short for the month, cut back on other expenses.
- Develop a sound investment strategy based on proven principles and practices.
- Don’t invest too conservatively. CDs, savings accounts and money market funds may be ultra safe, but they are currently yielding negative returns (considering inflation). It’s a guaranteed way to lose purchasing power.
- Understand risk. Risk is good. It’s the reason why the stock market can generate above average returns. If you understand it and manage it effectively you will always come out ahead in the long-term.
- Exercise discipline and patience. We’re not talking about instant gratification here. In fact, the less gratification you seek today will ensure the more of it you will have in the future.
- Don’t go at it alone. The world of investments is vast and confusing. And it’s easy to let your emotions drive you to make big, costly mistakes. You need a coach, a financial advisor who is willing to educate you, hold you accountable to your plan, and keep you moving forward even when things get rough.
Yes, anyone can become a millionaire – at least anyone who has a plan and the discipline to stick with it. The only thing standing in the way of you becoming one is your lack of action. Remember, time is your most valuable asset. Use it wisely.