Business Magazine

Do Not Focus On Investing If You Want To Be Rich

Posted on the 24 May 2016 by Sgyounginvestment

Over the years, I've received many emails from young readers that they want to learn how to start investing. Most will want to invest because they want to make more money or think it will make them rich. I too started with this mindset but I've come to realise that if we really want to grow our wealth, investing should not be the main focus. What should we focus on instead?

Should we focus on budgeting and saving? If we think about it, how much can we save if we scrimp on that $10 a week? Let's do some simple calculations, $10 a week is $40 a month which is $480 a year. That isn't a lot of savings indeed.

Do Not Focus On Investing If You Want To Be Rich

How about investing? If we can get 10% return on a little savings of $10,000, it is $1000 a year. Is this a lot of money? Furthermore, 10% investment return is quite a lot and not easy to sustain for the long term.

Don't get me wrong. I'm not saying that budgeting and saving or investing is not important. It is important but there is one key factor which will make budgeting and saving and investing much easier. This key factor is INCOME.

Why is income important? A person who earns $1000 can never save $1000 but a person who earns $5000 can easily save $1000 or more. The more income we have, the easier it is to save money without compromising too much on our lifestyle. A larger savings for investment will make a big difference on our returns on investment. If we invest $100,000, 10% return is $10,000 a year. This is a significant sum of money. Let's compare a person who has $10,000 investment capital vs a person who has $100,000 investment capital:


Assuming person A and B both invest and compound their money at 10% yearly, at the end of 30 years, person A who started with only $10,000 has $158K while person B who started with $100,000 has $1.58 Million. This example shows that our investment capital makes a big difference.

With this, rather than just focusing on investing, wouldn't it be important to focus on our income as well? The more income we have, the easier it is to accumulate a bigger investment capital assuming we are prudent with our money.

The first $100K savings is important. As seen in the calculation above, a person who has $100K compounded at 10% would have 1.58 Million. Even if its just 8%, it would also be close to a Million dollars in 30 years time.


You Might Also Like :

Back to Featured Articles on Logo Paperblog

These articles might interest you :

  • One Week

    Week

    It's been just over a week since we landed in Tashkent. The trip was uneventful, other than William acting like a typical 17-month old baby and keeping... Read more

    The 15 July 2018 by   Sherwoods
    FAMILY, PARENTING
  • Not Quite Eschatology

    Quite Eschatology

    Realized eschatology, if you’ll pardon my French, is a term that describes the “already/not yet” aspect of the “end of the world. Read more

    The 15 July 2018 by   Steveawiggins
    POLITICS, RELIGION, SOCIETY
  • 8 Lessons From The Field On Building A Premier Brand

    Lessons From Field Building Premier Brand

    Every new business dreams of becoming the premier brand in their space, like Starbucks is to coffee, and Apple is to consumer electronics, but they have no... Read more

    The 15 July 2018 by   Martin Zwilling
    BUSINESS, CAREER
  • Superhero Doll Hopes to Help Young Black Girls Beat Low Self Esteem

    Superhero Doll Hopes Help Young Black Girls Beat Self Esteem

    FirstLadyB | B Inspired By Entertainment News Young black girls battling lo... Read more

    The 15 July 2018 by   Firstladyb
    SPIRITUALITY
  • 5 of the Best Places in Glasgow for Ice Cream

    Best Places Glasgow Cream

    62 total views, 62 views today 5 of the Best Places in Glasgow for Ice Cream Whether it sunny or dull a “pokey hat” will always bring a smile to a face.  Here... Read more

    The 15 July 2018 by   Emma
    DESTINATIONS, DINING OUT, FOOD & DRINK
  • GoGoHares!

    GoGoHares!

    Following the flight of camp dragons, the parade of vivid jumbos and the troupe of panto gorillas in our midst comes an assortment of big-eared, bright-eyed... Read more

    The 15 July 2018 by   Jackscott
    DIARIES, EXPAT, SELF EXPRESSION
  • Brew the Perfect Iced Tea by TE-A-ME

    Brew Perfect Iced TE-A-ME

    Be it any season, staying hydrated is important and what better way to do so than by enjoying a nice cold glass of tea. Yes, make your water interesting by... Read more

    The 15 July 2018 by   Dr.jenifer Sayyed
    LIFESTYLE

Magazine