Right now is a terrible time for investors. Risk exists everywhere. Banks won't loan to each other let alone you. If you do have cash right now. Where is the best place to put it?
In part of Best Investments in a Depression, I discussed paying off your debts as a way to get 100% safety and earn a decent return. But what if you don't have any debt?
I have $0.00 debt. I do have a credit card, but it's paid in full every month. My mortgage is paid off, my student loans are long gone. Now what do I do?
Advice From People Who've Done It
Like a lot of people, I'm always looking for advice. But while some people seem to take advice from anyone with an opinion, I turn to people who have done what I want to do.
Mark Cuban is the owner of the Dallas Mavericks and successful businessman. He has an interesting post about how to get rich. I agree with much of his advice.
Save your money. Save as much money as you possibly can. Every penny you can. Instead of coffee, drink water. Instead of going to McDonalds, eat Mac and Cheese. Cut up your credit cards. If you use a credit card, you dont want to be rich. The first step to getting rich, requires discipline. If you really want to be rich, you need to find the discipline, can you ?
I agree with most of the above. I do use credit cards. I'm not a credit card zealot, if you can use credit cards responsibly, go for it. If not, cut them off. If you do use them, pay them off every month.
If you can, you will quickly find that the greatest rate of return you will earn is on your own personal spending. Being a smart shopper is the first step to getting rich. Yeah you have to give things up and that doesn’t work for everyone, particularly if you have a family. That is reality. But whatever you can save, save it. As much as you possibly can. Then put it in 6 month CDs in the bank.
I am very frugal. But I'm not necessarily that way be nature. My wife is the one with the financial discipline. She worked her way through college with no student loans.
Saving money on what you buy, and even better on what you don't buy, is a great way to get ahead.
We do have a lot of money in the bank. And yes we do have several CD's at varying lengths of maturity.
The first step to getting rich is having cash available. You arent saving for retirement. You are saving for the moment you need cash. Buy and hold is a suckers game for you. This market is a perfect example. Right at the very moment when cash creates unbelievable opportunity, those who followed the buy and hold strategy have no cash. they cant or wont sell into markets this low, that kills the entire point of buy and hold. Those who have put their money in CDs sleep well at night and definitely have more money today than they did yesterday. And because they are smart, disciplined shoppers, their personal rate of inflation is within their means. Cash is king for those wanting to get rich[.]
Again, save your money for a rainy day. I invested more in the market as it went down. Some of my money is for the long term and I thought the low prices in the market offered a rare opportunity.
The Best Investment is You
Education is an investment in your future. College prepares you for a profession. The money and time you spend in college is an investment in your future.
The 2nd rule for getting rich is getting smart. Investing your time in yourself and becoming knowledgeable about the business of something you really love to do[.]
I want to add to this. I think know is the perfect time to change jobs, or go back and get training for a new job. If you get laid off, take advantage of job training programs. Careers in the medical/geriatric care fields are going to be good for decades to come.
The truth is, you will make more at a job you like/love than one you can barely tolerate. Investing your time and money in your own business or training for a new profession is a great idea now.
My goal is to some day support myself writing software. I already do that now. What I mean is that I want my own software company. I really like what I do. I just want more control over it. I want to be the owner and the boss. I think I know a lot about the business.
I'm not in a real hurry to start. I was, but with the collapse of the economy, I've adjusted my time line. I want to bankroll the operation as much as possible. That means I'm saving up a lot of cash in secure investments like high interest savings accounts and certificates of deposit.
I'm sure if you analyze it, you'll find that investing in yourself is one of the best bets you can make. You have little to no control of the stock market. Unless you're the best stock picker in the world, you 401(k) is going down like everyone else's.
In the long run, your major source of income is your profession. So finding one you love and that you're good at, and building your skills is the absolute best way to get wealthy.
Tags Investing Making Money Work & CareerRelated Posts
Comments
1 Comment so far
Excellent article!
Good information, and success comes from many different areas, not just some get rich quick schemes! Saving money during these times is one of the best things to do. Unfortunately, most people will continue to spend unnecessarily, like Mr. Cuban said, becoming rich requires discipline.
Good work!