Capital GrowthCapital ReturnFinancial StrategyInvesting

Follow These 3 Financial Principles, And You’re Set

When asking how to invest, most people want actionable advice if they can work on right now. When it comes to finance, gurus will give you all different plans, with one thing in common – they’re all extremely complicated. Finance doesn’t need to be complex and difficult. Simply follow these 3 financial principles, and you’ll be set.

1) Invest as early, and as much as you can.

If you read this blog, you’ll know that I feel that investing as early as possible is the best move to become a millionaire by 25. The earlier you invest, the earlier you will see your money start to compound, and consequently, the earlier you’ll see big wealth.

If you invested 15 grand right now, in 50 years with a 12% return annually you would have about 4 million dollars. That’s why investing as much as you can now can be so impactful for your future. If you work hard, you can make about 5 grand of Summer. After 3 Somers, you’ll have $15,000, and if you invest all of this you could be able to retire off it. Invest as early as you can, and as much as you can, and you’ll be set for the long run.

2) Be prepared for the unexpected

The majority of Americans do not have emergency savings, or only have $1,000 in cash saved. Many rely on credit cards, thinking that ” if an emergency happens, I can just use the card”. This is an extremely poor mentality. First off, using credit cards in general are very poor decision, you can read about this on my blog post called “cut the cards”.

You need to be prepared for the unexpected, if you expect to thrive and survive in a capitalist society. Save enough cash for at least three months’ expenses. For most people, that should be $10,000-20,000. This is savings separate and distinct from your vacation fund and your investments. You should know that you have this money whenever you need it (so don’t put it in risky investments, no matter how appealing).

3) Earn More

Never settle for your salary, always try to improve yourself. Earning more money sells many of the problems that you may encounter in your life. So you’re making two grand a month, and you are able to increase that to three grand a month. That means you have 12,000 extra dollars to throw around, invest, put into an emergency savings fund, so on and so forth.

If you choose to work in the traditional workforce, the earlier you start making more money, the larger your future raises will be , since raises tend to kick in as a percentage of your existing salary, which means more money over your lifetime.

If you follow these three simple principles throughout your life, invest, prepare and earn, then you’ll be set financially. Continue to gather more money, invest that more money, and prepare for a rainy day. Do all of this as a young adult, and by the time retirement comes around, you’ll already be living the good life.

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