How to make your first $1 million

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How to make your first $1 million

  1. 1. Entrepreneurship Ref: 0003INVESTMENT NOTICE: Message Web Site Content LimitationsWe make no guarantees as to the accuracy, thoroughness or quality of the information on this web site, which isprovided only on an “AS-IS” and “AS AVAILABLE” basis at User’s sole risk. Investopedia shall not be responsibleor liable for any errors, omissions or inaccuracies in the web site content. The information and investmentstrategies provided at this site are neither comprehensive nor appropriate for every individual. Some of theinformation is relevant only in Canada or the U.S., and may not be relevant to or compliant with the laws,regulations or other legal requirements of other countries. It is your responsibility to determine whether, how and towhat extent your intended use of the information and services will be technically and legally possible in the areas ofthe world where you intend to use them. You are advised to verify any information before using it for any personal,financial or business purpose. The web site content and services may be modified at any time by us, withoutadvance notice or reason, and Investopedia shall have no obligation to notify you of any corrections or changes toany web site content.How to Make Your First $1 MillionThe Millionaires MindsetWhen your grandparents lamented that a dollar just isnt a dollar anymore, they werent just bellyaching. Inflationattacks the value of a dollar, reducing it as time goes by so you need more dollars as time goes on. That is one ofthe reasons that $1 million is often thrown around as a retirement goal. Back in 1900, a $1 million retirement wouldinclude a mansion and a bevy of servants, but now, it has become a benchmark for the average retirementportfolio. The upside is that it is easier to become a millionaire now than at any time before. While you wont bebuying islands, it is still a goal worth shooting for. Read on for 10 ways to make your first million. For further information on this article and the coaching programs available please contact: Image Group International Asia Pacific Head Office Tel: (+61 3) 9820 4449 E: info@imagegroup.com.au W: www.imagegroup.com.au ©2009
  2. 2. Stop Senseless SpendingIts easy to spend your way out of a fortune. Fortunately, the opposite is also true - you can save your way into yourfirst million. Most people working in North America right now will earn well over $1 million during their working lives.The secret to saving $1 million lies in keeping more of what you earn. Just as extending your earnings offers aunique perspective, doing the same with your spending sheds a ghastly light on the waste. If you spend $5 everyday of your working life on coffee, snacks, etc., you lose $73,000 of your lifetime earnings, making it that muchharder to hit the $1 million mark in savings.Prune Your PurchasesWhen you do have to spend, try to get the most utility, not simply the most you can. The difference between greatvalue and utility is a fine line. Buying too much house or too costly a car comes from confusing the two. If you shopfor what you need and buy it cheaper than youd planned, thats a great deal. By keeping the end use oflarge purchases in mind, you can avoid this drain on your cash. Before paying more than you can afford, rememberthat Warren Buffet, a man who constantly jockeys for richest person on earth, still lives in his humble Omahaabode. For further information on this article and the coaching programs available please contact: Image Group International Asia Pacific Head Office Tel: (+61 3) 9820 4449 E: info@imagegroup.com.au W: www.imagegroup.com.au ©2009
  3. 3. Target Your TaxesAnother leaky hole you need to plug is the parasitic drain of big government. While you are expected to pay yourtaxes, its the right of every taxpayer to try and reduce their tax bills to the absolute minimum allowed by law.Increasing your tax awareness means making taxes a quarterly chore rather than an annual scourge. Keepingabreast of allowable deductions, changes to your withholding and changes in tax limits will allow you to keep moreof what you earn, so that you can put that money to work for you.Crafty CompoundingTime is on your side when youve got compounding working on your savings. The earlier you start saving and theearlier you get your savings into a financial instrument that compounds, the easier your path to $1 million will be.You may be thinking of tenbaggers or hot issues that return 10 times their value in a few weeks, but it is the boring,year-on-year compounding that builds fortune for most people. For further information on this article and the coaching programs available please contact: Image Group International Asia Pacific Head Office Tel: (+61 3) 9820 4449 E: info@imagegroup.com.au W: www.imagegroup.com.au ©2009
  4. 4. Build Through Your BossIf youre looking to save $1 million dollars for retirement, look no further than your boss. With matchingcontributions, your employer can be your best ally when it comes to building up retirement funds. If you think youneed to squirrel away 20% of your income for retirement and your boss puts up 6% in matched contributions, thenyoure left with a much more manageable 14%. Even if you are your own boss, there are still options under SEPs.Ramp-Up Your Retirement SavingsRather than letting your bosss contribution lessen your load, try to put a little extra into your retirement planwhenever you can. Automating your account contributions will make setting your money aside that much easier.That said, making extra contributions a priority will speed up your journey to $1 million and make your golden yearsthat much more golden. You dont have to eat cat food to do this, just keep your retirement in mind when youve gotextra cash on hand. For further information on this article and the coaching programs available please contact: Image Group International Asia Pacific Head Office Tel: (+61 3) 9820 4449 E: info@imagegroup.com.au W: www.imagegroup.com.au ©2009
  5. 5. Incremental InvestingIf youve got your retirement portfolios where you want them and are ready to start a pure income portfolio, thenincremental investing is an excellent way to begin. You dont have to jump into the market with your life savings tomake money. Even relatively small amounts can result in decent returns. The important thing to remember withyour income portfolio is that capital gains taxes will be applied yearly to any income you pull out. Again, improvingyour tax awareness will help reduce the bite, but it takes time and knowledge to make one million solely from ataxable portfolio. Still, it has been done and will be done again. (See Investing 101 to get started.)Dare To DiversifyIf your portfolio is made up entirely of American companies or is even all held in stocks, then you may need todiversify. In the first case, more and more financial activity is out there in the wider world. This doesnt just meaninvesting in emerging economies like China and India that are producing huge gains, but recognizing that there arecompanies in Europe and Asia that are just as good (maybe better) as investments in the U.S.. Diversifyingalso means not putting all your money into one type of asset. Being a financial omnivore opens up that much moreopportunity in times of growth and makes certain you wont go hungry when one source dries up. For further information on this article and the coaching programs available please contact: Image Group International Asia Pacific Head Office Tel: (+61 3) 9820 4449 E: info@imagegroup.com.au W: www.imagegroup.com.au ©2009
  6. 6. Reconsider Real EstateOwning real estate provides equity and diversity to your investments. If you own your own home, then paying yourrent builds up equity. If you invest in real estate, then someone elses rent builds up your equity. Real estateinvesting isnt for everyone, but it has built fortunes for many savvy people. Owning your own home, however, isusually a good idea regardless of your opinion on real estate bubbles. Peter Lynch, one of the greatest stockinvestors of all time, believed that you should own your first home before you buy your first stock.Increase Your IncomeThere is nothing terribly romantic about becoming a millionaire while working a regular job, but it is probably theavenue available to most people. You dont need to start your own business to pull in a high income, and you donteven need to pull in a high income if your saving, spending and investing habits are sound. Asking for a raise,upgrading your skills or taking a second job will add that much more to your savings and investments and subtractthat same amount from the countdown to your first million. If you are entrepreneurial at heart, starting a businesson the side can actually decrease your overall tax bill, rather than putting you in a higher income tax bracket. For further information on this article and the coaching programs available please contact: Image Group International Asia Pacific Head Office Tel: (+61 3) 9820 4449 E: info@imagegroup.com.au W: www.imagegroup.com.au ©2009
  7. 7. The Three PsPersistence, patience and purpose are common traits that youll find in every millionaire from John Jacob Astor toBill Gates. Even though inflation has brought the value of $1 million down from its lofty perch, you still need thesetraits to reach it. Why isnt everyone a millionaire? Maybe because it is easier to spend now, buy big and put offsaving and investing than it is to sacrifice to reach the goal of becoming a millionaire. Using the tips given here canhelp you on your way, but you have to be brave enough to take the steps - first, final and all the hard ones that layin between. For further information on this article and the coaching programs available please contact: Image Group International Asia Pacific Head Office Tel: (+61 3) 9820 4449 E: info@imagegroup.com.au W: www.imagegroup.com.au ©2009

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