You don’t get wealthy by accident – the wealthy know some secrets about investing that help them get richer and stay wealthy.
Asides from personal accomplishments, I’ve worked with, coached and learned from some of the wealthiest people in the world. And I’ve discovered specific investment strategies that the wealthy use repeatedly to grow their money.
Here are the top five investment secrets of the wealthy:
- Invest early and often
- Leverage other people’s money
- Invest in both public and private companies
- Reduce the taxes you pay to the IRS
Good news — anyone can leverage these strategies and see results!
It’s proven again and again.
This article discusses in detail the following strategies:
- how to start investing early
- what is leverage, and how can it be used when investing
- the different types of investments available
- how to reduce taxes by making pre-tax contributions and taking advantage of write-offs.
So, if you want to know the secrets the wealthy use to get ahead, keep reading!
Start Investing Early
One of the best things you can do for your future is to start investing as early as possible. The earlier you start, the more time your money has to grow.
Of course, not everyone has a lot of money to invest when they’re young. But even if you can only invest a small amount, starting as early as you can is still worth it.
There are two main reasons for this:
- compounding and
- time in the market.
Compounding is when your money starts to make money – essentially, your investment grows exponentially over time. The earlier you start investing, the more time your money has to compound.
Time in the market is also essential. Starting early gives you a long time to weather any ups and downs in the market. This is important because even if there are some down years, the market always goes up over time.
Leverage Other People’s Money
Another secret that the wealthy use to get ahead is leverage. Leverage is when you use other people’s money to finance your investments.
For example, let’s say you want to buy a rental property for $100,000. But you only have $20,000 of your own money to invest.
You could take out a loan for the $80,000 and use that money as a down payment. Then, you would be levering other people’s money to finance your investment.
Leverage is a powerful tool because it allows you to make investments you wouldn’t otherwise be able to afford. But it’s essential to use it wisely because if your investment doesn’t perform well, you could lose a lot of money.
Invest in Both Public and Private Companies
When most people think about investing, they only think about stocks. But there are actually two different types of companies that you can invest in: public and private.
Public companies like the New York Stock Exchange are listed on a stock exchange. Anyone can buy and sell shares of these companies.
On the other hand, private companies are not listed on a stock exchange. They’re usually smaller companies owned by a small group of investors.
Both public and private companies can be good investments. It just depends on what you’re looking for.
Public companies might be a better option if you’re looking for stability. But if you’re looking for higher growth potential, then private companies might be a better bet.
The important thing is to diversify your portfolio and not put all your eggs in one basket.
Reduce the Taxes You Pay to the IRS
Lastly, another secret the wealthy use to get ahead is reducing their taxes. There are a few different ways to do this.
One way is to make pre-tax contributions. This means you put money into an account, like a 401k or an IRA, before taxes are taken out.
By doing this, you’re essentially reducing your taxable income. And that means you’ll owe less in taxes.
Another way to reduce your taxes is to take advantage of write-offs. This can be done in a few different ways. Still, the most common is to deduct expenses related to your business or investments.
For example, let’s say you’re a real estate investor. You can deduct travel expenses, marketing costs, and repair bills.
By taking advantage of write-offs, you can lower your taxable income and, as a result, owe less in taxes.
Start Investing Today
If you’re not already investing, now is the time to start. These are just a few secrets the wealthy use to get ahead.
So what are you waiting for? Start investing today! Following these tips can put you on the path to financial success.
Do you have any other tips on how to get ahead? We’d love to hear from you.Leave me a message at jared@redwoodplanning.com, I’ll respond the same day.
