Wealth is never gotten overnight and the want of overnight wealth is the root of all evils. Evils hiding under greed, fear and lack of contentment.
Investing is a game of wealth accumulation not that of income generation, at least not in the short term. When you invest you are betting that the future will be better than today. Not two weeks will be better than today, no. It’s that ten years will be better than today. Two weeks can carry a lot of disaster with it, but in ten years, even if there were disasters, it won’t matter because we would have had significant progress.
In a previous article, I wrote that investing won’t solve your income problem. Here’s like a sequel to say, investing will solve your wealth problem.
Anybody can build wealth from the habit of investing. And your income doesn’t matter here. Of course, it will matter when you are defining wealth for yourself. You can’t earn $100 per month in 40 years working career and expect to have accumulated a wealth of $1m.
So while investing will bring wealth to anyone, we still have to define that wealth within the threshold of someone’s lifetime income.
Investing your way into wealth
Investing is a way to put your savings (the difference between what you earn and what you spend) into work for you.
Do it for a long enough time, and you will make wealth. Yes, you will make wealth because assets that you are investing in will grow in value and your wealth will grow as they grow.
You don’t need to have the best of knowledge before you can invest. I wrote about how doing that investment with Risevest can be the best option for you. And I’ve also written about how buying simple ETFs can be a viable option. Both of which I am doing for myself by the way.
What I’ve not shared on this blog is the power of compounding as you build wealth.
S&P 500, an index that tracks the top 500 companies in the US have returned about 10% per year on average in 50 years. If you managed to invest just $100 per month for your 30 years of a working career, you would end up with a net worth of $200k. And as I noted in the tweet below, that might be just more than enough for anyone out of developing countries to maintain an upper-middle-class lifestyle.
Even though all that you were able to contribute in your entire working life was $36,000, with the help of compounding, you were able to earn more than $170k in interest.
This is to show you that investing can help you build wealth but it cannot do it overnight. It is so interesting that if you choose to work just an extra 5 years, your net worth would grow to $340k within that short period of time. Yes, with time, everyone can build wealth.
On the hand, the first 10 years of investing your paltry $100 monthly cannot even move a needle. That’s why all who desire overnight wealth never get it and they are almost always parted with their money. Oftentimes, out of greed.
You must define your wealth
When we talk about wealth, the first thing that comes to a lot of people’s mind is the kind of Elon Musk or Jeff Bezos money. I’m sorry, very few people on earth will ever have that kind of money. Also, you don’t need that kind of money to be wealthy.
The beginning of your definition of wealth must start with contentment. Because wealth is not how much you have in your bank account or aggregate investment that you have but the difference between what you desire and what you have. Yes, if you desire a Richard Branson lifestyle, it doesn’t matter if you have $10m in your bank account, you will always be poor (albeit mentally). Someone with $1m may be richer than the one with $10m, it’s a matter of your desire and what you can afford.
I should mention lastly on this point that, you need not be able to afford everything that your eyes desire before you can be wealthy. As a matter of fact, only King Solomon has had that kind of wealth. Everything that his eyes desired, he gave to it. You know his conclusion; vanity. So please define your wealth.
While investing won’t solve your income problem, it can help you to build generational wealth.
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