New Investor's Guide to Building Wealth
Resources to Help You Grow Your Nest Egg & Generate Income
If you have the right mindset and strategy, building wealth can be one of the most enjoyable and rewarding experiences in your life. The prosperity that comes from wealth accumulation means having control of your time, freedom from worry about meeting your needs, assurance that you will always have a full pantry, heat in the winter, nice clothes, and money for entertainment. Affluence means being able to send your children and grandchildren to college; to establish trust funds and UTMAs.
In short, when you are wealthy, money becomes a tool; nothing more and nothing less. It works for you. You don't work for it.
To help you on your journey to build wealth, I've put together some resources that you can work your way through sequentially. This foundation should give you a decent view of the process, challenges, and strategies you might employ to grow your net worth. I recommend you use this page as your base, following each linked article, studying it, and then returning to move on once you feel comfortable that you've mastered the topic. As always, if you have any questions, you can most easily reach me at my personal blog, where I write about more advanced finance and investing concepts.
Building Wealth Starts With Saving Money
To understand your wealth building goals, you need to study the statistics and find out exactly how much money it takes to be considered "rich" in the United States.
You might be surprised at how small the amount is compared to the images you see on television or in the movies. You can then compare this to the amount of money sociologists claim it takes to maximize personal happiness in the United States. Taken together, this will let you come up with "your number".
That number is the total wealth you need to accumulate to afford the lifestyle you desire, living off your investment income alone but we're getting ahead of ourselves.
Once you have your number, it's time to start saving. This might seem simplistic but building wealth begins with the savings habit. The secret to making money is realizing there are only two levers you can pull. As you adjust those two levers, you can use the surplus to grow your cash reserves; cash reserves that ultimately get deployed into productive assets. These articles will help provide some prospective.
- The Four Ways to Make Money
- Saving Money vs. Investing Money
- You're Spending Your Millions $1 At a Time
- How Much Money Should I Be Saving?
- The Key to Saving Money: Pay Yourself First
- 5 Ways to Make Saving and Investing Easier
- 4 Ways to Come Up With Cash And Add to Your Savings
- How to Save Your First $100,000
- How Much Money Should I Keep In a Savings Account?
- Should I Pay Off My Debt or Save Money First?
The Next Step to Building Wealth Is Using Your Savings To Buy Productive Assets That Generate Passive Income
Once you have a surplus, you need to put it to work in productive assets; things that throw off passive income that comes in all hours of the day without you having to sell your time.
Passive income doesn't discriminate. It doesn't know if you are young or old, black or white, gay or straight, conservative or liberal, religious or agnostic, male or female. Passive income is the secret separating the wealthy from everyone else. The rich have to work for their money. Though they often choose to work, the wealthy don't need to do so. They could sit back and collect gushers of endless checks from the vast estates they've acquired.
- Passive Income from Dividends, Interest Income, and Rents Is the Key to Building Wealth
- An Introduction to Passive Income - Making Money While You Sleep
- Measuring Your Investing Success By Your Annual Passive Income
- Create Backup Passive Income Sources to Protect Yourself During a Recession
- 4 Things To Look for In a Passive Income Stream
- Using the Berkshire Hathaway Model of Diversified Passive Income in Your Own Life to Build Wealth
- 8 Ways to Become Financially Independent By Accumulating Passive Income and Building Wealth
- Building Wealth Through the Dividend Investing Strategy
- The 4 Sources of Wealth That Make an Investment Valuable
- The 8-Part Recipe to Making a Fortune and Building Wealth from Your Investments
The Actual Process of Building Wealth, and Accumulating Passive Income, Happens from Selecting Investments
To learn more about the basics of the different types of assets you might accumulate in your quest to build wealth, check out these articles.
- Making Money from Investing in Stocks
- Making Money from Investing in Bonds
- Making Money from Investing Mutual Funds
- Making Money from Investing in ETFs
- Making Money from Investing in Real Estate
Learning To Pay the Lowest Taxes You Can Is an Important Part of Building Wealth
As you accumulate assets, you are going to want to learn about different tax strategies that allow you and your family to keep more of your cash flows and net worth. This includes everything from specific tax strategies to tax shelters such as Congressionally-designed retirement plans. These articles will help you understand some of the basics.
- How to Pay No Taxes on Your Dividends or Capital Gains
- Investing in Tax-Free Municipal Bonds
- 3 Reasons To Consider Investing in Municipal Bonds for Tax-Free Passive Income
- How to Use the Asset Placement Tax Strategy to Build Wealth
- 7 Ways to Lower Your Family's Investment Tax Burden
- Using Deferred Taxes to Increase Your Investment Returns
- Capital Gains Tax Guide for New Investors
- Using an Individual Roth 401(k) To Build Wealth
- Why the Roth IRA Is the Perfect Tax Shelter for Building Wealth
- How Small Business Owners Can Use a SIMPLE IRA to Build Wealth
- Using a 401(k) Plan to Build Retirement Wealth
- Using a 403(b) Plan to Build Retirement Wealth
- Tax Advantages of Investing in Series EE Savings Bonds
Additional Resources You May Want to Study When Learning to Build Wealth
Finally, there are some other general philosophy articles about building wealth and getting rich you are going to want to read.
- 7 Rules of Building Wealth and Amassing Money
- 7 Ways to Destroy Your Wealth and Guarantee You Spend Your Life in Poverty
- The 5 Things You Need to Do If You Want to Get Rich and Build Wealth
- How to Get Rich from Your Investment Portfolio
- Tips for Making Money and Building Your Net Worth
- 10 Secrets of the Capitalist Class
- How to Become Wealthy
- Yes, Virginia, you Too can Be Rich - A Guide for New Female Investors Who Want to Build Wealth
- Six Steps to Build Wealth and Retire Rich
- 3 Secrets to Building a Great Fortune
- How Scrooge McDuck Taught Me To Build Wealth
If you are looking for inspiration about people who have built wealth, I occasionally do case studies of so-called secret millionaires on my personal blog. From a janitor who left behind an $8,000,000 fortune to a reclusive computer programmer who amassed $18,000,000; a lawyer who quietly built a stock portfolio worth $188,000,000 to a retired IRS agent who turned her $5,000 savings into a portfolio valued in the tens of millions of dollars from her apartment in New York, ordinary Americans have been using the stealth wealth strategy to grow rich for a long time.'
Often, this is done through long-term ownership of stocks. I occasionally do case studies of famous blue chip stocks, too. I showed you how a $100,000 investment in Procter & Gamble grew to $1,182,131 in only twenty years. I walked you through Clorox turning $100,000 into $1,501,546. I showed you how Tiffany & Company turned $100,000 into a multi-million dollar fortune. I explained how Starbucks turned $100,000 into more than $10,000,000. We looked at how you could have bought either Coca-Cola or PepsiCo and gotten very, very rich. We looked at how Nestle made its owners rich, too. We examined how Chevron minted oil millionaires and how The Hershey Company made generations of Americans wealthy. We looked at those who had built wealth from investing in General Mills and those who had built wealth from investing in McDonald's. We even looked at how companies that went bankrupt, like Eastman Kodak, actually had a positive return for long-term investors.
In the end, it's all the same game: Accumulating good assets that are structured intelligently and throw off fresh funds for you to spend, reinvest, save, gift, or donate, empowering you to arrange your day doing what it is you enjoy, and spending time with the people you love, rather than selling more hours of your life.