The Ten Roads to Riches – The Ways the Wealthy Got There (and How You Can Too!) Summary - Road 6

Road #6: Frugality and Investing Well (The Road Most Traveled)

1.       Live frugal and save – the most common way people get wealthy, though it doesn’t generate the biggest fortunes.

2.      This road is wide enough for anyone with a paycheck. This road doesn’t require a degree.  However, saving is a must here!

Guidelines:

3.      Get good paying job.

a.      Find a job in a well-paying, relevant field you like.

b.      Find a firm paying better than its peers.

c.       If you are in a sinking industry, get a different job. Get to know people from different industry and interview them.

d.      If you live in a low-paying geography, move.

e.      Do what you love – but it is better if what you love pays really well.

f.        A job hunt is a sales pitch. Perfect yours to get more offers. Never stop researching and selling yourself.

4.      Figure out how much you want/ need.

a.      Figure how much you want by date X. Adjust it for inflation.

b.      Use Excel!

5.      Calculate what you need to save each month.

a.      Estimate a desired ending value and create a saving schedule. Stick to it!

6.      Be frugal.

a.      Saving is a must!

7.      Make your money work.

a.      Get ok, but not phenomenal, investment returns.

b.      You must own stocks pretty much always. Diversify and go low cost.

c.       If you can time the bear market, you should go OPM instead.

d.      Beware: most investment books lead you astray because they’re largely based on faulty assumptions that one size, style, or type of stock is best forever. Untrue!

e.      If folks are commonly predicting bad times, know you should own stocks.

f.        One warning:

                                                  i.      Corrections are different from bear markets. They are short, sharp shocks – big sudden drops designed to scare the pants off you. They can happen once or twice a year.

                                                ii.      Real bear market start slow and calm. People are optimistic after the peak. Stocks drop a little month-to-month, but nothing dramatic. Meanwhile, fundamentals unravel and few notice.

8.      The near term doesn’t matter – hardly at all! The roads to riches are long.

Conclusion:

You just need to try. Initial failure doesn’t imply a permanent dead end. Your odds keep improving the more you try. As you improve your odds in life, you become richer naturally. It just happens and it will for you.

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