All of us have the capacity to accumulate a great fortune, yet most of us can barely make ends meet after we retire. Why is this? Basically for two reasons.
First is the culture of consumerism. “Shop till you drop” is the repeated slogan everywhere, even if you have to overdraft your credit card. Buy now and worry about paying tomorrow. We haven’t been able to develop a culture of saving and investing as they do in other countries, especially Japan.
The second reason is that we think we will be young forever. This false feeling of eternity promotes the lack of planning. Life can be an impulse of immediate actions regardless of what will happen tomorrow. Tomorrow never comes…there is always another tomorrow. This is not correct, there is a final day with no tomorrow. If you don’t plan for the future, you will end up being old, weak and broke.
I recently came upon an article written by CNN Money.com dubbed, “10 Rules for Building Wealth” which is rich with tips to help you you reach your Golden Years with enough cash in the bank.
Let’s take a look at these ten rules:
- Start to save and invest early on in you life. The sooner the better.
- Start immediately putting in pretax dollars in 401(k) plans. If you don’t know what this is, go to your Human Resources Department and ask for help. This is a must, please don’t forget about doing this first thing tomorrow morning as soon as your reach your cubicle.
- Select simple and easy to understand investment options. Don’t get too complicated or you will lose all your money and your shirt.
- Don’t try to beat the market. Diversify your assets and then re-balance your portfolio at least once a year. (Buy low, sell high – get it?)
- Don’t be a herd follower; meaning don’t do what others do without knowing why. Before making an investment investigate the why, what, when, and where information. Be informed, don’t guess.
- Make your savings or investments automatic. For example, see whether your company can automatically transfer money directly from your paycheck into your Roth IRA or a taxable account.
- Balance out your risks. When you are young, you can take bigger risks than when you are aging. Stocks are good when you are just starting and bonds are better and more secure when you are reaching your retirement age.
- Be on the alert for fees. Don’t let money slip through your fingers by paying unnecessary commissions or management fees.
- By all means avoid credit card debt. Some credit card can carry interest rates as high as 30 percent. Instead use students loans whenever possible; their interest rates are generally between 3 and 6 percent.
- Defer paying taxes as much as you legally can; (the longer you can defer paying taxes, the more time you’re giving your money to grow). Consult a tax experts whenever in doubt about paying investment taxes.
If you are just starting earning a salary, please follow these rules and I promise you will be well off when retirements comes. This is where the real fun begins. Getting well paid for doing nothing. Make money work for you, not the other way around. Good Day.
Source: 10 Rules for Building Wealth – CNN Money.com
Lingua Franca 
If people could follow these 10 rules…they will definitely be rich but most of people i know could not bow before rules
Hello Sushil:
Yes, I also know many people who would not even take the time to read a post like this. However, in Europe and Japan, savings and investments is part of their culture. That’s why they are buying most of the companies in the United States and it’s public debt. What a pity.