How to Look Beyond Dollars and Cents
By: Barron Boon
Building wealth is not an easy task unless you are born with a golden spoon in your mouth. However, it is also not an unachievable task given the right conditions, preparation, and discipline. Here are 5 most important wealth-building lessons shared by high net worth individuals who have traveled the long and winding road of success.
1. Follow The Basics
Latest findings of the 2016 US Trust Insights on Wealth & Worth survey reveal that as much as 89% of the high net worth investors have climbed the ladder of success and accumulated huge investment gains through stocks and bonds. The majority of them (almost 83%) say that they managed to build wealth through long-term buy-and-hold strategies. Instead of going for the higher returns, the majority of these investors preferred reducing their risk but enjoying low and steady returns. They refer this to as the basic formula for accumulating steady wealth.
2. Parenting Can Make A Huge Difference
Successful high net worth investors share that you need to have a strong set of family values in order to become a responsible investor. Following are the two values that these high net investors enjoyed to become successful in this field:
- Positive Family Environment
Active family support plays an important role in building a strong foundation and can prove to be an important asset for a calm and rational investor. The majority of the high net worth investors enjoyed active family environments in their formative years. They report that their parents were always there for them providing them sufficient emotional support when they needed their help. This helped them build a strong foundation.
- Financial Discipline
Another important lesson that most of the high net worth investors learned in their formative years is discipline. Discipline, financial or otherwise can go a long way in helping investors make logical and sound investment decisions. Parents need to teach their kids the financial management lessons from the day they ask for a toy from the store. A logical effort v/s reward system can be very helpful in demonstrating the value of hard work to the kids.
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3. Start Savings At An Early Age
Latest findings of the 2016 US Trust Insights on Wealth & Worth survey also reveal that most successful investors began actively saving money at an early age. Most of them developed the habit of saving money before they turned 14 and by the time they were 15 years old they were already making money by doing small tasks. The allowance they received from their parents and the money they earned from performing various household chores is separate from these tasks. A lot of the successful multi-millionaires also took a plunge in the stock markets in their early age and by the time they were celebrating their 25th birthday they became seasoned operators.
If you want to join the ranks and files of these successful investors, you need to learn the importance of time, as time is the greatest asset that many of us will never have. Therefore, start your investing journey at your earliest to make the most of your time.
4. Prioritizing Future Goals And Current Needs
In order to become a successful investor, you need to learn how to prioritize future goals and current needs. A long-term mindset is a key to becoming a leader in the market. Instead of relying heavily on instant gratifications, parents need to shape the thinking of their kids on a more long-term plan.
According to the latest survey, as much as 81% of the successful investors gave preference to their future goals over their current needs. They focused on funding long-term goals like retirement lifestyle expectations, next generation wealth transfer, and legacy plans rather than on their short-term needs.
5. How To Deal With Taxes
Latest findings of the 2016 US Trust Insights on Wealth & Worth survey also reveal that as much as 55% of the high net worth individuals gave importance to minimizing the impact of taxes when making investment decisions.
It is therefore very important to learn and fully understand the “ins and outs” of the taxation system in your country in order to select ideal asset allocation and wealth distribution options.
If you are an aspiring investor, you need to keep all the above tips in mind going forward. Although these tips are not guaranteed steps to make you tomorrow’s millionaire, they surely can help you make better investment decisions.
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