You’ve all heard stories about young people who founded successful corporations before their 30th. Some of them even made wealh and fortune before they graduated college. Successful entrepreneurs all share some common characteristics: preternatural financial savvy, a singular focus, and ability to aggressively pursue project funding.
These young people are all adept at identifying problems and creating solutions, but they’re also ambitious and are not afraid to take a few risks.
It is possible to build your wealth from an early age. The business and financial leaders of tomorrow constantly seek ways to improve upon products and systems already in place and improve their financial acumen.
What are the best ways to make you rich from an early age?
Ways to Create Long-Term Wealth
Mark Zuckerberg, the founder and CEO of Facebook, took up computer programming as a hobby in middle school. He make himself rich at young age.
Neither of this men may have initially imagined that his pursuits would lead to billions of dollars in wealth, but he found ways to fill a niche in the field and invest their money wisely. While it’s impossible to say exactly what your path to long-term wealth might look like, there’s no doubt it’s going to involve some combination of entrepreneurship, investing and innovation.
Innovators are the inventors and re-inventors of the world.
Are you the kind of person who frequently thinks of ways to improve upon the existing processes and products around you? To many people, the form and function of the products we all use are flawless and the processes in our work and technology are above reproach, but if you believe there’s something that could be streamlined or changed to better integrate into modern life, you may be an innovator at heart.
Innovation is one of the best ways build long-term wealth, but it’s also something that can’t be rushed or forced. You may find have a lot of decent ideas throughout your career, but very few that have what it takes to catch on. After identifying an idea that stokes your passions, take some steps to test its viability in the marketplace.
Here’s how to take innovative ideas to the next level:
Start by researching the web, reading articles, and signing-up for industry association mailing lists which may be able to offer trends, surveys, statistics, and so on. You should also sign-up for notifications from your competitors to see what they offer, how much they charge, and how they operate.
Your next step should be to set up a landing page of your own online. Essentially this is a teaser for your forthcoming business.
Take this a step further and reach out to set up interviews with potential clients who either signed up on your landing page or whom you’re able to identify through research or your personal network. Ask these folks if a service or product like the one you plan to offer could be beneficial to them and what feedback they may be able to offer in advance. You can get a great sense of potential demand this way.
Next, you have to ask yourself how practical your concept is. A few things to consider include: whether production will be logistically feasible and affordable, where the product will be manufactured, how expensive and accessible are materials, and will you need staff. However, these are only a few considerations of the myriad that should be taken into account before launching your venture. A familiarity with the industry, its resources, and your competitors will help you determine if bringing your idea to market makes sense.
Turn your hobby into a business. If you’re passionate about a hobby, you may be able to turn that hobby into a business.
Consider starting a business. If you have a full-time job, you can increase your investable income by starting a part-time business. Use the extra income to increase your monthly investing. By increasing your investing, you’ll accumulate wealth faster.
Take a serious look at your personal spending habits. If you don’t create a formal budget for yourself, you may be wasting money that could be put toward investing. Create a budget using your take home pay from work and all of your expenses. Look at your variable spending each month. Some spending, like your car loan/home loan EMIs are fixed. Other types of spending are variable. Try to keep a tab on those.
Starting business not only provides you with a great sense of accomplishment, it also allows you to take control of your financial future. You control how much money you make, how fast your business grows depending largely on the merit of your idea and the amount of time and work you invest.
If you want to be an entrepreneur, ask yourself what you’re most passionate about. The successful entrepreneurs aren’t the ones who simply want to make money in order to be their own boss, they’re the ones who turn an existing passion and expertise into a career.
After identified your passion, develop a solid business plan to present to investors. This should include analysis and market research, identifying prospective competition, vulnerabilities, and opportunities to forge new ground. By including the following information in your business plan, it should also spell out very specifically how you intend to take your business from funded concept to successful venture:
A mission statement communicates the ultimate purpose of your business idea and details how you intend to operate and grow.
What resources do you currently have at your disposal (skill set, home office, marketing channels) and what resources do you have to acquire and further develop. What do you expect the cost in time and money to be?
Create a monthly picture of your expected income and expenses over the first 12 to 24 months of your venture. The sooner you feel you can reach profitability, the better. But don’t sugarcoat your projections at all; An honest assessment is critical at this stage.
How do you intend to go from the idea phase to a finished product or service? You need a concrete plan for how you’re going to develop your product or service, how much it will take to get there, and who will aid in the effort.
How do you intend to reach customers? Use the Internet, social media marketing is an excellent tool. Create pages on Twitter, Facebook, Instagram, and additional platforms. Reach customers by engaging them on your competitors’ pages.
Unless you’re independently wealthy, you’re going to need start-up capital to get your business off the ground. That means you’re going to need investors who believe in your business, and also in you. If you’ve ever watched the show “Shark Tank,” where entrepreneurs pitch their ideas to would-be investors, you’ve probably seen that the money always flows to the people who are most passionate about their business, not to those who simply have a good idea. A good idea can take you a long way, but it can’t take you all the way to the top.
Becoming an entrepreneur is hard work, sometimes, you have to work 80-hour weeks to get your company off the ground. Before endeavoring into it, it’s important to take a step back and examine your ability, focus, and drive to determine if you have the stamina. If you’re unsure, move forward, but do so without investing undue amounts of money or time that could derail a full-time job or career. Think about it from the perspective of where you’d like to be in 20 years. If one day you want to be independent and working for yourself, then that’s exactly how you have to start out.
Investing involves using best resources, including energy, money, and effort to create a profit. Wise investors must continually exercise discipline, patience and commitment. They must also be open to hearing bad things and sometimes harsh advice from trusted advisors. They don’t let their emotions get the better of them, have their ego firmly under control, and make a point of learning from, and not repeating, their mistakes.
There are 2 types of capital when it comes to investing: money and time. If you have both, you can make a fortune. But you must start out investing with at least one.
People with little money, but plenty of time (as in years to be invested) can put the power of compounding interest to work for them. If, for example, you invested $1,000 at 10% interest, you’d only earn $100 if you took your money out of the investment at the end of the year. If, however, you let that $1,000 grow over 20 years and re-invested the interest earned, you’d end up with $6,727.50. Better yet, if you invested $1,000 every year for 20 years, at 10%, the investment would grow to almost $60,000. The sooner you start investing and the longer you let your investments grow, the more likely you are to gain and control long-term wealth.
Investors with more money but less time, have options beyond compounding interest. These people should research and even be heavily involved in the companies they invest in and look to turn a significant profit in generally less than 10 years.
These investors may incorporate a direct approach (buying a fledgling business) or getting an equity share (as an angel investor perhaps) that they expect to rise significantly in value within a short period of time, such as five years. They can also incorporate making money via passive investing by buying index funds.
Use compounding when you invest. Once your funds are in savings, move the funds into an investment as soon as possible. You’ll earn a higher rate of return in an investment. When you move money from savings into an investment vehicle, take advantage of compounding. Compounding will make your investments grow faster. The longer it rolls, the faster it grows. Compounding works faster if you invest more frequently. When you compound your investments, you are earning “interest on interest”. Over time, you earn interest on both your original investment and on the prior interest you earned.
Buy stocks. Investors buy stocks to earn dividends and to benefit from an increase in the stock’s price. Stocks offer better returns on average than most other types of investments. While stocks offer higher returns, they also involve more risk. The longer you are able to invest in stocks, the more time you have to recover from a stock price decrease.
Invest in bonds. When you buy bonds, you are loaning money to the government or corporations. Bonds pay a fixed rate of interest on your investment each year. You can reinvest your interest in more bonds and allow compounding work for you.
Use a savings account or a fixed deposit. A savings account gives you access to your money at any time with very low risk. This option, however, offers a low interest rate on your investment. A fixed deposit (FD) offers a slightly better return, but with less flexibility. You must leave the money with the bank for a period of time ranging from months to years.
Invest in a mutual fund. A mutual fund is a pool of money contributed by many investors. The funds are invested in securities, such as bonds or stocks. The mutual fund portfolio can generate bond interest or stock dividend income. Fund investors may also benefit if a security is sold for a gain. Mutual fund accounts are easy to open and maintain. Investors pay fees to the fund for money management. You can add to your investment regularly and reinvest your earnings, if you choose.
Start early. If you want to accumulate wealth, time is the most important factor. The longer you save and invest, the more likely you are to reach your goals and build sizable wealth. You can set aside more money to invest over a long period of time than over a short one. If you start investing early, you have more time to make up for any investment losses that will occur in some years. Investors that start later have less time to make up for any investment losses. Time will permit your investments to rebound in value.