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This material was written to make you understand that quick money is good, but at some point you will have to start building your capital and establishing a stable system of income. And these simple rules will help you a lot with that.
** Investing is a long-term endeavor**
Your capital is your savings. To accumulate savings, you need to regularly set aside money. This doesn’t mean you have to save a lot. You just need to save a certain amount every month.
For example, let’s consider creating an investment portfolio. It consists of assets with different degrees of risk. If one asset sharply increases, you can increase the share of another asset that has not yet shown its potential. This way, you will increase your financial significance, and your income will grow proportionally to your capital, thereby becoming more.
As a result of long-term work on yourself and your finances, you will have a portfolio of assets that will provide for you. You need to look for ways to earn 10-20% per year; this is enough for good growth rates of capital.
** Expenses should not be greater than income.**
To gradually increase your capital, you need to create a surplus balance. This means that the amount of debt and obligations should decrease, while assets should grow.
** Compliance with risk management is key to accumulating capital.**
- Don’t try to make money quickly. You need to evaluate the risks inherent in each asset and adjust their share in your portfolio accordingly.
- Choosing the Desired Income = Choosing the Level of Risk. These risks can include losing investments, time, relationships, facing imprisonment, or even death.
- There is no such thing as impossible money - it’s all about weighing the risks and determining your likelihood of achieving your goals. Evaluate how much risk you are willing to take and whether the potential rewards are worth it.
How to Manage Debts and Loans
• Avoid taking on new consumer loans.
• Pay off old loans until they are completely paid off.
• Do not use credit cards.
Loans can be advantageous if you are confident that you will earn more money thanks to the borrowed funds. However, this feeling can be misleading, so it is important to consider the worst-case scenario before making a decision.
Assets and Liabilities
• A liability is an investment that does not generate profit for your capital or work process.
• An asset is an investment that provides immediate benefits and helps you earn more now or in the future.
How to Build Assets?
Distribute your income wisely and invest to increase your assets. Additionally, monitor your expenses and decrease the share of liabilities in your life.
How to Build Wealth?
Wealth = (working hard + taking calculated risks) * time
It would be foolish not to accumulate wealth for yourself in ten years of hard work simply by following common sense.
** What do you need to do?**
Allocate your income each month and year towards purchasing assets with a positive price outlook that bring you a steady income.