Over the last two weeks, we’ve been discussing the need to build a million-dollar investment portfolio to provide a retirement income of $50,000 or more to supplement Social Security. Let’s continue our discussion today.
Step 5. Save More
Your income should rise as time passes. You’ll get raises, you’ll change jobs, and maybe you’ll become a two-income family. Every time more income comes in, increase the amount that you save.
Step 6. Watch Your Spending
Vacations, cars, kids and all of life’s other expenses take a big chunk out of your paycheck. To maximize your savings, you must live below your means. Living a lifestyle that is not on credit is required if you want to boost your savings.
You might ask, “What if all of my friends have a nicer house and cars than I do?” Wish them well … and don’t ask them how much debt they have!
Step 7. Monitor Your Portfolio Annually!
There’s no need to obsess over every movement of the Dow. Instead, check your portfolio once a year to rebalance your investment allocation to stay on track with your plan.
You ask, “Don’t I need to keep track of what the markets do each day?”
The answer: No! I manage hundreds of millions for a living. I do not obsess over the daily movement of the markets. Take a long-term approach to investing!
Step 8. Have Patience
“Get-rich-quick” schemes are usually just that—schemes. The power of compounding takes time, so invest early, invest often and accept that the road to financial independence is typically long and slow.
Step 9. Minimize the Use of Debt
Debt may allow you to do more or have more now, but debt will reduce your ability to have more in the future. This is true personally, this is true in businesses, and this is true for governments. Financial problems are magnified with debt. Use it carefully.
Step 10. Enjoy the Fruit of Your Labors Without Violating the First Nine Steps
All work and no play makes Jack (or Jill) a pretty dull person. Learn to celebrate the gift of life without violating the steps I have outlined.
For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here. Or download Jentner’s newest white papers on The Four Cornerstones of Prudent Investing and The Active Versus Passive Investing Debate.