Many of us dream about being wealthy. It feels great but this feeling often fades before we’ve even gotten out of bed. Maybe someday you’ll think of the next great business idea which could turn you into the next self-made millionaire. However, building wealth isn’t about putting your hopes into “someday”. Neither does it require as much effort or time as you might expect. The best time to start building wealth is right now! Here are some tips for getting ahead.      

Finding the money to invest

Telling yourself that you’ll invest the money left over at the end of the month is unrealistic. Instead, investing needs to be done at the start of the month. Think of it as paying yourself first as this money does end up working for you. Furthermore, even if you’re expecting a promotion or a salary increase, the income creep is well observed. You’re likely to end up increasing your spending which means you aren’t left in any better financial position than before. 

Finding the excess funds shouldn’t be an emotional tug of war game. The best place to start is to find out what your largest expenses are. For most of us, rent, eating out and sporadic spending on unnecessary items are the places to start looking at first. 

Automate the investing 

Automating the deposit of funds at the beginning of the month, by making use of a debit order facility into an investment/savings account, is the single best step to take. When the money isn’t there to spend, it isn’t spent. 

You won’t have to actively make the great decision to invest on a constant basis which is less emotionally draining. 

Too many choices

When investing, one of the biggest hurdles to overcome is deciding where to invest. The question of where to invest is often a paralysing one due to the vast number of investment products available. 

What we often don’t realise is that the biggest losses in investing are from selling and buying at the wrong times – and not necessarily the product we invest in. Market timing is nearly impossible. If you are investing consistently and for the long term, you won’t be much better off in any other similar investment product. The decision to automate investing and start as early as you can is what results is wealth creation.  

The two bucket approach 

For many years, “simple” and “investing” have seemed to be contrasting words. However, keeping things simple is often the best approach. This is where the two-bucket approach helps – one for savings and one for investing.

The “savings” bucket should contain cash, money market investments and savings accounts. This bucket should be filled first as it is there to support you in the case of an emergency. The amount within it should be able to support you for at least 1 years’ worth of needed items – a roof over your head, food and other necessities. 

The “investment” bucket should contain a diversified selection of investments – real estate, stocks and bonds. The easiest way to receive exposure to the “investment” bucket product is through mutual funds, ETFs or indexes. These are also inexpensive ways, which are advised as opposed to buying individual assets.     

So what are you waiting for?

It’s never too late to start investing and following these few simple practices can help turn your dream of wealth into a reality!

Ross Reid

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Ross has joined the 22seven team as a Slice and Blog writer. He's a keen financial writer who enjoys demystifying the world of finance. Ross is currently pursuing the CFA designation and has a background in Real Estate finance and investment. In his spare time, he can usually be found reading, running or on the football field.
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