Jennifer Waters of Yahoo Finance reported on ways to learn from Millionaires to become wealthier.
Among the key points:
Most of those folks with a net worth of $1 million or more have earned it themselves by their actions.
The Wealthy are typically business owners of various types who typically put most of the money they make into making more money. Through investment and not consumption they can grow the wealth.
Wealth is the result of hard work, planning and discipline.
Wealthy diversify their investments, which gives them more flexibility to ride out difficult times. "Their portfolios that go way beyond just stocks and bonds into hedge funds, currencies, commodities and emerging markets," said Leslie Lassiter, managing director of the JPMorgan Private Wealth Management.
Millionaires use cash for their purchases more frequently as opposed to running up large interest on credit card type purchases or financing their lifestyle which some with more modest means do.
Most wealthy people use debt for investment purposes and are careful not to over-leverage themselves.
The wealthy typically spend lots of time planning and enjoying making and following a strategy to patiently achieve their goals over the long term.
"The best ones really understand how much liquidity they need to cover their expenses and make sure they have that much cash on hand," Lassiter said. "That's something the average person should do as well."
Suggestions for building wealth:
Live below your means
Plan: for today, tomorrow and years after retirement.
Diversify investments.
Reduce use of credit and turn to cash - The point of this comment was not to run up large interest rates and debts although actually the best practice can be to use credit that offers cash back or rewards then pay it off on time as it further enhances the credit rating and gets money back or savings on other items.
Have access to cash: While the rich keep much of their wealth invested, they can get cash when they need it. Lassister suggests a year's worth of cash to cover expenses; Danziger thinks three years worth is a better bet.
Spread cash around: When the wealthy took money out of the stock markets a few years ago, they opened a number of bank accounts, all guaranteed up to $250,000 of deposits by the Federal Deposit Insurance Corp.
Important to teach children and seek out good estate planning attorneys: The affluent can go to great lengths to teach their children about money and how to manage it -- something every family should do. They should also be aware of the family finances and the family should be aware of the plan so there is less a chance of probate or trust litigation being needed.
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