Invest with a millionaire mindset

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The word millionaire used to feel ambitious and almost achievable, something only those who had unusual success or who ran large companies could achieve.




Today, with the rise of the Internet and social media, not only does it appear that the number of “overnight millionaires” has exploded, but with the rise in house prices in many. cities and regional towns in Australia, being a millionaire is starting to sound like a necessity rather than an ideal.




Financial education isn’t required, and it’s not about counting every penny, either. Rather than shifting focus to making thoughtful decisions to grow your wealth in a sustainable way, you may be able to achieve that elusive seven-figure status. And this journey can start with just $ 100 towards your personal financial goals.




Conscious budgeting and spending




I have a pragmatic relationship with money. When I see money in my account, it represents a decision with two possible outcomes:




  • Spend: I get what I want now, but this money is gone forever.
  • Save and invest: I can invest and grow my money, then have some more money to spend later on something I really want.




A very important part of budgeting is understanding your values, which will help you determine the things that you are willing to live without in order to build your wealth for the future, as well as the things that you are ready to invest in now. (enjoying life now is also important!).




You don’t have to give up the things you love entirely, but setting limits and reducing yourself will not only help you build your wealth, but I find it also makes your experiences more interesting when you decide to indulge yourself.




A key part of controlling your spending is also avoiding high interest debt. Consider whether a credit card is right for your lifestyle, how you’re positioned to take on additional debt, and how much value you’re really getting from it. Often times, unless you’re super organized and desperate for AMEX or Frequent Flyer points, the risks and costs often outweigh the benefits and can create negative overspending habits.




Start investing regularly




You’ve stopped spending so much and let’s say you can save $ 100 per week. Now is the time to start making money with your money.




If you save $ 100 per week, starting today at a 3% interest rate, you would have saved $ 321,630 after 35 years. It might sound like a nice amount of money, but we can’t forget a little thing called inflation which means every dollar will be able to buy you less in the future.




With inflation currently at 3.8%, we will need more than 3% to move forward!




To fight inflation and build wealth over time, you can invest your money in different types of assets. The two most common for Australians are ownership and stocks.




Goods




  • Advantages: Physical assets, good historical returns.
  • Cons: High deposit required, all your money in one property / location initially.




Equities and investment platforms




  • Advantages: low start-up cost, easy to diversify, good historical returns.
  • Cons: Can be volatile, non-tangible, and may require research and knowledge.




Investing in stocks can actually be a great way to save for a real estate deposit, with lower minimums and the ability to diversify into different industries and companies. When it comes to your options for investing in stocks, there are different types of investments, the most popular being:




  • Micro-investment: Some apps allow you to choose “portfolios” which are managed investments (they invest on your behalf) with small amounts of money.
  • Exchange Traded Funds (ETFs): These are “baskets of stocks” that hold and realize the performance of an index, for example the ASX 200 (Australia’s 200 largest listed companies), or funds that focus on ethical companies. ETFs can help you diversify sectors and countries without having to buy many individual companies.
  • Shares in individual companies: Investing in sole proprietorships can be great if the business is experiencing very unexpected growth, but unless you invest a lot of time in research, the expected growth is already built into the course of action by the professionals. So, trying to choose the right company at the right time can be risky because your performance depends on one company.




To find the best option for you, you can compare different investment accounts using Canstar.




















  • Websites: The Australian Government’s Moneysmart website.
  • Podcasts: Equity Mates, She’s on the Money, and The Australian Investors Podcast are some of my personal favorites.
  • YouTube and Online Articles: If you’re just looking for “how to invest in Australian stocks” or “invest in ETFs for beginners”, you’ll find plenty of content to help you along the way.




Let’s go back to our example, if you are able to invest $ 100 per week for 35 years and get an average market return of 8.55% per year (the average return of Australian stocks over the past 30 years) , you will probably end up with $ 1,140,806.




Welcome to the millionaires’ club!




Source of cover image: Of Fortune/Shutterstock.com








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