How To Make More Money In 2015
With 2015 quickly approaching, this is a great opportunity to re-evaluate your investment accounts and strategy. Many people make the mistake of thinking they need a large sum of money in order to start investing. The most important thing, however, is to invest consistently, regardless of the amount.
Tony Robbins, in an interview with Warren Buffett, asked his secret to wealth. Buffett replied, “No. 1, it’s being born in America. No. 2 is good genes, so I live long enough. And No. 3, it’s compound interest. Compound interest — people have no idea the power that it really has.”
As an example, one UPS employee never made more than $14,000 per year, but he set aside 20 percent of his income and invested it in his company stock. By the time he was 90 years old, the value of his investments grew to $70 million!
In this series, I give tips that you immediately can implement to start off on the right foot in 2015 and earn more money. You can visit artofthinkings-mart.com/invest for more information.
1) Start Early, Start Now. The best time to invest may have been in the past, but the second-best time to invest is today! Everyone, regardless of income, can take advantage of the power of compound interest. Einstein called it the “Eighth Wonder of the World.” Compound interest is the interest you earn on the initial amount you invested and the interest you already earned. It is basically “interest on interest.” The growth becomes exponential the more time you have. Of Buffett’s $63 billion net worth, approximately $60 billion came after his 50th birthday, and $57 billion after his 60th. While you can always work to get more money, invest wisely to get a higher return — you can never get more time. Since the power of compound interest comes from time, you need to get started as soon as possible.
2) Get Automated and Use Psychology. Opening up an investment account is easy if you don’t already have one. You can set up an automatic withdrawal from your bank account to put away as little as $10 a month. Contact your investment company to find out how. Studies have shown that consistent investing over time is more effective than waiting to accumulate money to invest. In a recent interview I had with Mike Michalowicz, best-selling author of Profit-First (go to artofthinkingsmart.com/7 to listen to the free podcast), he mentioned that, psychologically, we tend to spend what is readily available in our bank accounts. This is called Parkinson’s Law, where our demand for a resource (time and money) increases to meet the supply of it. This is why, when we have a week to do a project, it takes a week, and when we are given four weeks to do the same project, it will take four weeks.
The same goes for our money. If we see money in our account, we tend to spend it. By using Parkinson’s Law as an asset and moving money straight into an investment account, we start investing on a regular basis and we are forced to find ways to get the same things done for less money.
Next week we will cover more tips to start making more money.