Good stocks to invest
I would like to address something that many friends, relatives have asked me, upon knowing what I like to think about.
How do you make more money than the Fixed Deposit rates we are getting at low risk???
Long time readers would think I will launch into an explanation that you need to put money into and fund your Wealth Machines.
Rest assured this is much simpler.
What do you put your money into?
No no no.
Here is what you do:
- Make a list of where you allocate or spend your money on in a month, or in a year, put down how much you spend or usually spend on them (here is a good article to get you started to make this list)
- Reflect upon each item and ask yourself
- If you REALLY need them
- Are you overspending on them and you could make do with LESS
- Are they effective to the original vision you want when you spend them
- Have they outlive their usefulness?
- Do they REALLY make you happy?
- Consolidate how much of the above you could do away and you can reduce.
There! you have your Infinite Returns, not just 100-200%!
In most cases, I wouldn’t be surprise that you can squeeze out $100-$200/mth this way. As your cost is negligible, your returns are to infinity.
I under-promised and over-delivered!
You want an “Alternate Stream of Cash Flow”, this is it
You probably would have stopped reading this post from how ridiculous this may sound, but it is how I manage to tweak my friends and family member’s disposable income and gain the money to build wealth.
We were spammed by blogs such as Investment Moats that it is better to have more than a single stream of cash flow, other than our natural stream of cash flow from our day job.
Think of this stream of cash flow as one from your decadent and unfocused self paying you on a recurring basis to put the money to better use.
Examples of these unneeded, not effective, un-joyful items
I cannot come up with an exhaustive list, but from what I gone through with others here are the common ones:
- Cable TV – When they realize they don’t have the time to watch and spend more time watching streaming on their laptop
- A 10 session Sliming or Weight Control package, where while working, is not high on the person’s priority, where eventually she will put the weight back on
- That set of supplements that wasn’t really helping your problems but you are continuing to take it
- Keeping the car, not because your work needs it, or that you cannot live without it, but that your girlfriend could not make up her mind whether she wants you to keep it
- Not waking up early, thus 3 days a week you take a $25 taxi ride to work
- Sending your daughter to an art class, so that she have some activity to do, but you can clearly see she is not enjoying it
- Your extravagant meals are too often for the pay you are getting
You do not value what you paid for, so it was unprofitable for you
It would have been very different if you find these activity really meaningful, helpful for your family’s life or your life, or it is a real necessity.
But in reality, they are not, so you didn’t have any emotional, or physical gain.
They are wasted and they are unprofitable to you if you keep allocating your money this way.
It is very difficult to make a 100-200% gain in a year on your money, unless….
For the novice wealth builder, who are not acquainted with the maths, they would take time to realize getting even a consistent 10% gain on the capital they put in is not so easy.
Suppose they contribute $200/mth into an STI ETF (perhaps through the POSB Invest Saver), and assuming the annual rate of return is 7%. Your $24,000 put in over this 10 years will grow only to $33,159. Not too bad but certainly you are not doubling your money.
Building wealth wisely is important, a skill that you have to learn, as early as possible so that you can do it over the next 30-40 years.
However, how can you double your money? By being very aware of what you value and don’t spend on services and things that do not bring value to you.
You gain the $100-$200 easily this way.
You complained about Not Being Able to Fork out an Extra $200-$300 to Build Wealth
One of the reasons I have to go through this exercise with others a lot is because, I was told, they cannot find extra money to invest or save.
The best way to find money to invest is…. to identify and eliminate low value spending!
The second best way is to be focus in your job, get a good increment or get a 20% raise which may generate $400-$600/mth more.
But riddle me this: usually if you are able to be such a good performer to do well in work and move on because you are in demand, you probably would be able to figure out to minimize low value spending.
Turns out, not this is not always the case! Good work performer does not mean they are equally good with money.
Be vigilant about where you allocate your money
This may sound bull crap, but it is really how I build up part of my net worth. I added some money to my Wealth Machine not too long ago and its because I am easily contented and need very little spending to gain additional fulfillment.
Thus, inadvertently, my money just built up and one day I realize it has become sizable that I should do more with it. I am also learning. I am not always the best allocator.
When you are starting off on this wealth building journey, being vigilant on what you really value is more important to squeeze out the extra cash flow to put away. (it is only later, when you are further in your journey then you realize all these squeezing and optimizing matters less and you really need good competency to manage your larger wealth and spend less time thinking about these small optimizations when losing 10% on $300,000 can be a really big deal.)
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