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Home > Make Money Investing > For 2011, Start Building Wealth: Here’s How

For 2011, Start Building Wealth: Here’s How

January 9th, 2011 Leave a comment Go to comments

What’s the secret to financial prosperity? It’s pretty easy to describe but hard in practice. Most people sow the seeds for it without realizing it. For example, if you get a good education you learn skills that help you to think, analyze, and communicate effectively. It takes perhaps decades to complete and even then you are not done. Or, maybe you develop a long term hobby or interest that turns into a business. The first point is that prosperity doesn’t happen over night, it takes time to develop.

When you look at how prosperous people succeed, you will find that they develop skills around their passions, acquire and develop assets, and stick with it all over the long term.

That last statement is important. Success requires a long term commitment, you need to stick to it through times that can be giddy, depressing and everything in between. As investors our resolve was tested during the Great Recession of 2008. How did you fair? It is times like those that will determine if you have the right strategy to build your wealth over the long term.

Seeds Of Success

On this site, we mainly talk about improving your financial education. Once you understand investing basics and how investments make money, you can then study the many different types of investments that are out there. That’s where this site comes in, because we are going to do all of this work for you to find investments that will make you money. The first result of this effort is the Income Portfolio which you can track right along with me. This is a real portfolio that has is being tracked with trades as they occur.

How To Get Started

Getting started is the hardest part, perhaps harder than sticking with it. If you use this strategy, you will find that you can measure your progress and gain confidence quickly. The components are the following:

  • Target an initial goal of money you want to make. My own personal target is a monthly income target.
  • Find investments that offer good income and are attractively valued.
  • Save money, and buy high quality investments that pay dividends, income or interest. All of the investments in the Income Portfolio pay money.
  • Over time, add more money to these investments either monthly, quarterly, etc.
  • Track you progress by measuring your income you make.

Create A Monthly Target

We track the income of the Income Portfolio monthly. You will find that the income of the portfolio increases every month due to money additions, reinvestment and dividend increases. Pick an initial monthly target. For example, if you are able to find investments that pay 4% per year or 7% per year, the following table shows what you would need to invest to get to that target.

Monthly Income Initial Investment (4%) Initial Investment (7%)
$1 $300 $170
$10 $3,000 $1,700
$50 $15,000 $8,500
$100 $30,000 $17,000

Example: Income Portfolio

The income portfolio currently makes $47.46/month. When it first started out in October 2010, it earned $46.52/month. Not bad after about 3 months. Look for future updates that will show further improvement in this portfolio.

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