If you’re wondering how to invest to become a millionaire, take a look at this. The Millionaire calculator lets you see how much you need to save per year given your interest rate and inflation rate. If you’re anything like me it’ll be a massive disappointment. Also, given an inflation rate of 3%, after 24 years £1 million will be worth £481,417! That’s a little shocking. You really need to be looking to earn £2 million if you’re looking at this kind of time scale.
How To Invest To Become A Millionaire
Of course there are better ways to invest your money than putting it in a bank. I recomend a great app I just found which will help you invest without having to put too much time in. The Money Box lets you round up your daily spendings and invest into a range of shares and investments. Money saved is money earned! Plus money invested wisely should give you more back over the long run than you would get by just putting it in a savings account.
If you’re serious about becoming a millionaire take a look at my article how do millionaires think. Obviously you’re already ahead of the game if you’re investing, but it can also help to have a look at some important millionaire strategies too:
- Save don’t spend – Live below your means and put money aside which can be used for investing
- Pay yourself first – Millionaires know to put money towards savings every month. This goes out before you see it so you learn to live below your means while saving.
- Get rid of debt – Pay off debt first before looking to invest.
- Pay off mortgage early – Paying off your mortgage early is probably one of the best investments you can make. The money you save on interest alone will be quite a sum. Money previously going out on your mortgage can then be saved and put towards investments.
- Start Your Own Business – Working for money by trading your time for money is a limited model. Instead, use tools, technology and strategies to scale income with an online business model.
Invest In Yourself
Investments involve risk and the higher the risk you are prepared to take, the more you stand to make but equally, the more you stand to lose too. If you’re wondering how to invest to become a millionaire, you will need a lot of capital first. Get expert financial advise on investments first before committing. Invest in your self first by building your knowledge both in business and investments. Don’t trade time for money and get a business model which allows you to leverage your time to earn, rather than trade it directly.
Invest In Property
Investments in property are probably still the safest way to grow your money over the long term. If you don’t already own your own home it’s a good first step to get onto the property ladder. It’s a safe investment and everyone needs somewhere to live. Ideally pay larger amounts off of your mortgage payments when you can and pay off early. This will save you money on interest payments and free up cash flow for future investestments too.
Don’t Do Debt
Millionaires focus on increaing their assets and reducing their liabilities. An asset is something which makes you money. A liability is something which costs you money. Debt is the worst kind of liability. Don’t use credit is you can help it and pay off debt as soon as possible. If debt is allowed to build you will find yourself just paying the minimum payment each month and it can snowball. Pay it off early as a priority and use the money instead to save and build a portfolio of investments.
Get Expert Advice
ISA’s, buy to let property, shares and other investments can build up your investment portfolio. Ideally keep adding to your investments and pay in regularly as you can. Investing can be very lucrative if you do it right. Only invest with money you don’t immediately need and don’t leave yourself short. Get expert advice on all your investments and don’t invest money you’re not prepared to lose. Saying that, if you choose investments wisely and spread your portfolio amoung many different companies, (in the case of buying shares), you will minimise the risk.
Don’t Expect Too Much From Too Little
For most people, investing is a luxury. But it shouldn’t be. Anyone should be able to afford some investments. It’s just a matter of setting priorities. Many people will happily spend on things they don’t need without giving any thought to investing. Others will invest thousands every month. Depending on what your particular circumstances allow, you may be able to invest from 100’s to 1000’s each month.
The larger amount you can spare the quicker you can build your wealth. However, don’t expect your investments to make you a millionaire if you can’t afford to invest. Small savings produce small amounts of increase. Penny shares can offer affordable investing for most people. Choosing the right ones is another matter entirely. Get expert advice on which shares to choose.
How To Invest To Become A Millionaire?
So how to invest to become a millionaire:
- Invest your time – Learn to build your own business
- Don’t trade time for money, use a model which allows you some ‘leverage’ to earn
- Invest in your education – Learn how millioniares think.
- Invest in your property and pay off early
- Don’t do debt
- Spread investments accross many areas: isa’s, buy to let, property and shares etc...
Pension plans aren’t very glamorous but they are a good idea for 4 very good reasons.
- A pension allows you to get tax relief on your earnings (so you spend less)
- You build the habit of saving and investing
- Pension savings are often matched by employers (if you have an employer)
- Your savings accrue interest which compounds over the duration of your investment
Invest In Your Thinking
Confirmation bias shows us that our beliefs have a huge sway over the circumstances of our lives. Confirmation bias is the tendency to look for and interpret things in a way which confirms our pre-existing thoughts, beliefs and hypotheses. Therefore our beliefs about something determine how we think about it. The reality of our lives will always be determined (and judged) by our own thoughts and attitudes.
The results in our financial life are a direct result of how we think about and towards it, and how we think about ourselves. Success in business life too, is determined by the quality and depth of our thinking. Unless we can improve on our beliefs and knowledge around investing, business and how to earn, spend, save and invest money, we are unlikely to make any real progress. See how millionaires think for more on this.