The World Wealth Report 2008 done by Capgemini and Merrill Lynch stated that in 2007, there were 10.1 million individuals having at least US$1 million in financial assets. This is an increase of 6.0% from the previous year, 2006. India, followed by China and Brazil, recorded the largest growth in high net worth individuals (HNWIs) in 2007. How would you like to be one of the high net worth individuals and where do you start?
Learn and practice the 8 tips below and you would be well on your journey to reach your goal. At the end, you may realize that getting to the millionaire level takes a lot of commitment and persistence and it rarely happens overnight.
1st Tip: Start early to build up your money
Start from young to save a large portion of your income. Generally, young people start working at the age of 23. You work hard and save hard. Let’s say you saved $20,000 by the age of 25. You invest wisely in an investment vehicle that gives a return of 10% per annum. You never touch the money but continue to put in $300 every month for the next 30 years. At the age of 55 (25 + 30), you would have about $1 million to your name. You can thank the magic of compounding interest in helping your money grow. It is certainly not a bad way to get your first million and to ensure a tidy sum for your eventual retirement.
2nd Tip: Learn ideas or skills to establish several income streams
Smart people would always find ways to ensure that there are several sources of money going into their various funds. They do not wait for opportunities to come to them but seek them out actively. It is up to you to find the things that you can do in your spare time to increase your income level. Popular methods like direct selling, network marketing, MLM business and selling insurance are all still going strong. There have been cases where people have quit their normal desk jobs to do full time what is supposed to be their part-time work. Like these people,you never know until you give it a try.
3rd Tip: Work smart
You may have a desire to be the top person in your field. Why not be the top person and command a huge salary at the same time? If you have accumulated sufficient know-how to become an expert in your field, you can command a high fee to share your knowledge. People will seek you out for consultations in your area of expertise. Since you have worked hard for the money, remember to invest it wisely to let it work hard for you.
4th Tip: Invest in properties
Good examples of successful people in Malaysia are Azizi Ali, Milan Doshi, Renesial Leong and Dr. Peter Yee. This does not mean that you simply go out to buy any property that you fancy and expect to immediately make money from it. Like most things, you need to have sufficient knowledge in the area before you take the leap. Knowing when to invest and when not to is equally important as one wrong investment may affect your equity reserve. Hence, learn from the experts first and only then apply your knowledge.
5th Tip: Learn the ways to become a millionaire
You can either borrow or purchase books that teach you the ideas or methods to become a millionaire. Practice the ideas or methods correctly as recommended in those books and you have a greater chance of becoming a millionaire. There are so many books available and to name just a few of the popular titles are The Millionaire Next Door by Thomas J. Stanley and William D. Danko, The Automatic Millionaire by David Bach, The Smart Couples Finish Rich also by David Bach, 365 Ways to Live Cheap by Trent Hamm and Your Money or Your Life: 9 Steps to Transforming Your Relationship With Money and Achieving Financial Freedom by Vicki Robin, Joe Dominguez and Monique Tilford.
6th Tip: Control your spending and debt level
If you go to any financial website or blog, the idea of controlling your spending and level of debt is always emphasized. Even books on finance never forget to mention this idea. Do you know why? If you have gone through tip No. 5 above, you would have learned that this is one of the important habits practiced by millionaires. Therefore, adapt this habit as well as the other habits of a millionaire and you cannot go wrong.
7th Tip: Start a business
It is common to hear people going bankrupt due to a failed business venture. On the other hand, you also hear and read stories about people who have made it big through their successful businesses. A lot of times, these people actually failed initially but eventually through perseverance and because they have faith in their businesses, they become successful. The initial business idea can be crucial to whether it can be profitable or not. Just because you like to cook does not mean you can run a lucrative restaurant business. Finding the correct type of business to run is equally important where there should be a strong demand and big market for it. It takes a lot of skills to do well in business. Having one type of skill only may not be adequate to ensure that you can run your business well. You either have to learn the skills or source the work out. Doing everything right means your business has a higher chance of flourishing and making you a millionaire in the process.
8th Tip: Avoid making big money mistakes
Making the right investment moves can move you forward and up very fast but making huge mistakes can also push you right back to the bottom. Expand your knowledge and learn from other people’s mistakes to ensure that you do not make the same costly mistakes. It is normal to make small mistakes once in awhile from bad decision making but it is not acceptable to make serious ones that can wipe you out. It is good to be opened to new ideas and to try out opportunities but at the same time it is wise to be prudent as well.
There you have it, the ideas that can assist you in your journey to make your first million. If done successfully, you may reach your millionaire status sooner that you expected.
Do you have a great tip or idea to share? We would like to hear from you.
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{ 6 comments… read them below or add one }
Nice article. I love first tip. It was and will be always a basic tip to start the journey to be financially freedom one day. Once we had a saving, then we would have a gut to take certain risk to invest it and start accumulating wealth…
I had add ur blog in my blogroll..
Hi Fauzi, I’m glad you like the article. I practice several of the tips myself. I appreciate your comments!
Great article. I am practicing 1st, 2nd, 5th and 6th tips. I enjoy reading Azizi Ali’s and Dr Peter Yee’s books. Their books enable me to stay focus on my financial journey. Thanks for the sharing.
Good for you Yan! For some people, taking any action is so difficult and hence never improve themselves.
Hi Jac,
Thanks for the tips. As a retiree I share my experiences with my 3 kids who are in college especially on the 1st tip. I also tell them to treat their finances/themselves and their family in the future as if they are managing a company.
Hi Kamil, children nowadays are so lucky to have parents who are financially savvy. My parent’s only advice to me when I was young was to ’save money’ and that was it. I didn’t learn about investment, money management, high interest rate, compound interest, etc. until I finished my university education. It helps to learn and start early in financial education and management. Well done on your role!