If you're looking to grow your wealth, and provide for your family, then you'll need to have patience. The infographic above demonstrates that investing is a marathon, not a sprint. Let's look at the four strategies for generating wealth.
1. Saving makes investment possible. I know the first point is about investing now even with a small amount. And this is definitely true. But saving on some luxury expenses, and investing those savings, will allow us to splurge on ourselves later on. Cutting expenses and saving are the building blocks for developing a great investment portfolio. Even if the savings are small, the returns can become big.
2. Taking the risk to start early, and the consistency to see results. Most millennials are apprehensive about investing. I think we generally don't think about retirement or saving until it's too late. We also have a problem with delayed gratification. We want our wealth, and we want it NOW. However, it's important to start investing as early as possible. Having patience to stay consistently invested, adding to the portfolio regularly, is going to produce results.
3. We all know not to put all of our eggs in one basket. Diversification allows us to reduce the risk of one of our holdings having lackluster returns. It also helps us to take advantage of different asset classes, allowing us to reduce risk and raise returns. The best asset allocation strategies invest in businesses that have inversely related returns. Of course, having a solid dividend income portfolio also helps to smooth out price fluctuations.
4. Finally, we also need to reduce the expenses we pay for investments. These include commissions as well as management fees. Trading too much can cause us to pay unnecessary commissions. Investing in funds with high fees can cause us to not only fund our own retirement, but the portfolio manager's as well. Reducing investment costs helps us keep more of our money.