Do you ever dream of being able to retire early, travel the world, and live life to the fullest? While getting rich may seem like a distant fantasy, it doesn’t have to be. With the right knowledge and discipline, anyone can become wealthy and achieve financial security. Fortunately, there are several proven methods that many people use to become rich and build wealth.
In this article, we’ll explore four strategies that many people use to become rich. From the power of compound interest through investing to starting a business, we’ll discuss the strategies, tools, and mindsets needed to become rich.
1. Investing
Investing is probably one of the best ways to become rich. What does investing mean? In simple terms, investing means buying something and hoping to sell it and make a profit later. For example, you can buy a stock today for $10 and sell it 10 years later for $50. From this investment, you would have made $40 for every share of the company that you own.
Investing can be overwhelming at first. This is because it takes a lot of time and money to get started. Why time? Well, you will need to know how to analyze securities and sectors you want to invest in. So, the learning curve will be longer especially if you do not have a background in investing.
There are a ton of ways you can invest your money. Some of the investments you can pursue such as investing in stocks are obvious. Others are complex and require a ton of studying and research.
If you need more details on where to invest your hard-earned money, use the following guide.
Related: Where to invest money: An Investment Guide
How to succeed as an investor and become rich?
Even if investing sounds fun and an easy way of making money, it requires a lot of work and planning. There are a ton of people out there who talk about making quick 5 figures from a few thousand dollars in investments. These advertisements are only meant to recruit you as their customer. There is no guarantee that you can make that much profit in a very short time as they advertise. You would have to be lucky to make those returns in a short time.
Succeeding as an investor and later becoming rich requires a set of proven strategies. Those strategies vary depending on the types of investment you pursue. However, there are some common traits that all successful investors share.
Tips to make successful investments
- Education is the key to success. Like anything in life, what you know will determine your level of achievement. The more you know the better. As an investor, you must learn as much as possible in your area of interest. For example, if you are interested in rental property investing, you must learn as much as possible about real estate and how to invest in rental properties. You need to know how to:
- Analyze good deals
- Buy properties at the best prices
- Analyze real estate market fluctuations and predictions
- How to manage rental properties and do repairs,
- How to market your units, and
- Ways to find and screen tenants and deal with legal issues.
- Long-term investing is the key to true success. It is possible that you can buy a security and sell it a few months later with a 100% profit. The question is how often can you replicate this method? The truth is that it is nearly impossible to have consistent returns(gains) on short-term investments. Short-term investments are prone to market volatility and unpredictable movements. That is investment can have a short-term downtrend on a long-term general uptrend trend. Putting your money in long-term investments protects you from market pressure and secures long-term success.
- Diversification is a great way to minimize risk. There is no guarantee that the investments you have purchased will all yield positive returns. Some of your investments will definitely give you positive gains and make you rich. Others will tank and yield negative returns. All sectors do not move in the same direction at the same time. For example, during the Covid-19 pandemic, most businesses experienced a sharp decline except online businesses. If you had your money in travel, hospitality, and transportation, you probably lost most of your money. This is because nobody was traveling. For this reason, travel businesses closed their doors, and those that did not file for insolvency or made no sales. To minimize this risk, you must diversify your investments. Never put all your money in one basket. Invest in assets and securities from different and unrelated sectors. With this strategy, one bad investment will not negatively affect your portfolio.
- You will become rich only if you are patient and have exceptional discipline. Just like anything else, success takes time. Your investments will take time to grow and will experience ups and downs during their timelines. Some investors become impatient when their investments are not taking off at the time and rates they anticipated. So, they sell and put their money somewhere else. Others tempt to sell when their investments are experiencing rough days. The only way to have successful investments and become rich is to be patient and disciplined. If you have decided to not sell your stock for the next 10 years, what happens in between should not matter. For this reason, you should not sell during a market correction. These events happen in any market and you cannot stop them. So, corrections, recessions, etc. are all part of the journey and you must embrace them if you want to become rich.
2. Starting a business
Starting a business is a great way to become rich. But, before you start a business, you need to know that most businesses fail within a few years of starting. According to the data from the U.S Bureau of Labor Statistics report by Fundera, 20% of small businesses fail within the first year, 30% fail in their second year, and 50% of small businesses fail in 5 years. Then, 70% of businesses fail in 10 years.
The point here is that if you start a business you are more likely to fail than succeed. High competition and the economy of scale have made it difficult for small businesses to survive.
This does not mean you cannot start a successful business and become rich. There are some businesses that survive the storm and make their owners rich. So, if you cannot invest, starting your own business will be another path you can start to become rich.
So, how can you start a successful business in a very competitive market?
The following are tips you can use to start a successful business
- Have an idea and develop a killer business plan around it. A business plan is like a blueprint for your business. Just like you can’t build a house without a plan, you cannot start and run a business without a business plan. The plan will help you understand where you stand in the world and what you should do to stay competitive. Do you have an idea or a side hustle that you want to turn into a successful business? Use the following guide: 13 Steps to Turn a hobby into a successful business
- Analyze your competitors and provide solutions to what they are doing wrong. No matter what you will be selling, there will be competition out there. The degree of your success will depend on how you perform compared to your competitors. There is no way you will outperform your competitors without knowing what they do wrong. You can outperform your competitors by mastering and doing better on what they struggle with. Find their weakness and hit them really hard.
- Always think of the future, not the present. Before you start a business, understand that you are not starting a business to make quick bucks. The main goal for your business is to create a product that will stay competitive for decades. For this reason, you need to focus on the long term. Your business should be able to evolve as technology changes to stay competitive. Businesses are evolving fast as technology changes. Businesses that cannot adapt or reinvent themselves get crashed. A good example is the competition between Sears and Walmart. Sears used to be the biggest retail business player in the world until Walmart showed up. Sears then struggled to deal with technological changes and immense competition from Walmart and other stores like it. So, Sears went bankrupt. The same happened to many businesses as the online marketplace took off due to the rise of the internet. That is Amazon came out of the woods and hundreds of businesses closed their doors. Walmart too felt the pain and started to reinvent itself by focusing on online, free shipping, fast delivery, etc. What about the impact of Uber and Lyft on traditional taxi businesses? The point of the story is that no matter how good you think your business is, you must think about the future and get ready to adapt to new changes and reevaluate your business model when the time comes. This is the only way your business will stay alive and hopefully make you rich.
- Focus on what the customer wants: Your customer is very important and you cannot exist without your customers. For this reason, design your products based on what the customer wants not what you feel is good. You are not the one consuming the products you are making. So, take yourself out of the equation.
- Never take shortcuts and never lie: Shortcuts lead to product malfunctions, legal battles, and loss of businesses. Always advertise exactly what your product does. You cannot burn a house and hide the smoke. The truth will eventually come out and your business will take a hit. Have you heard of a company called Theranos? Its founder lied to investors and customers about what the business and its products were able to do. A few years later, the lie came out and the business closed its doors. Now Theranos is history and its founder is in a long legal battle. If you really want long-lasting business success, build your business on the truth.
- Your employees are equally important: Although you will pay your employees the minimum wage and think you are superior, employees are the backbone of the success of your business. Your customers will place orders and you will promise to deliver the products on given dates. You will then go to your employees and tell them what to build. Without them, you cannot deliver the products at all or on time. So, treat your employees with respect as your success will depend on their performance.
- Do not borrow more than you can afford: Some business owners worry about expansion and exponential growth. The truth is that as you expand, your expenses and competition increase. Without enough cash flow to cover these expenses, you will tend to borrow more money. Too much debt is not good for businesses.
- Work hard and keep your records: Starting and running your business will take a lot of time, hustle, and hard work. You will sweat a lot before the business picks up. It is equally to keep your business records to help you manage your expenses, track your performance, etc.
You might also like: 13 reasons why businesses fail really quick
3. Ways to become rich: Gambling
Gambling has made a lot of people rich. You don’t need special education and resources to gamble. The bad news is that gambling is sorely based on luck, not predictable, and cannot be replicated. For this reason, the success rate is extremely low.
Although you can become rich from gambling, it is not something I would recommend. Luck is not something you should rely on. Instead of gambling, consider spending your time on the first two options we have discussed above. They are more predictable, achievable, and replicable. With hard work, discipline, and the right education, you will stand a chance learning how to invest or start a business than gambling.
4. Get a high-paying job
There are many people who are extremely rich from just their incomes. These are high-paying jobs in higher management positions, C-positions, directors, doctors, engineers, etc. If you want to achieve this level of career success, you need to be well-educated, build your experience, connection, and climb the corporate ladder.
