Now, I'm not talking about throwing money into a regular 401k, or even dropping some cash on a hot stock tip. I'm talking about what the rich invest in. If your goal is just to have a few dollars in an account at the time you hope you will be able to retire, then go ahead and stick with the 401k alone. However, if your goal is to create real wealth and freedom, then you need to invest in the vehicles that will bring you that kind of financial leverage. A sophisticated investor can make money in an up market as well as a down market.
There are three income streams that you can earn from by exploiting the avenue of investing. They are:
1) Long Term Index Funds (S&P 500)
2) Hot Mutual Funds or High Yielding Funds (refer to morningstar.com)
3) High Profits, Low Cost Options (refer to the Investors Business Daily newspaper for information on stocks)
Think about this for a minute: You make your money when you buy, not when you sell. Catch that? If the goal of investing in stocks is to buy low and then sell high, you actually make your money when you buy low. If you are able to buy a good company at a low price, you are very confident that you can sell high as time goes by.
So, when is one of the best times to buy low? During a down market, right? This is how smart investors make money when they buy. If you have ever heard someone during a market crash say, "I have just lost so much money because of this crash!", chances are that this person has the "buy, hold, and pray" mentality and does not take advantage of the deals that result from a crash.
One way to take advantage of both up and down markets, is to sock away some funds during the good times so you can take advantage of the deals during the down times. If you do not save some during the good times, you can also sell just a portion of your stocks when you see that prices are coming down, so you can then buy some great companies for cheap when the market bottoms out. If the companies that you invest in are strong companies and have a solid structure and earnings history, chances are very good that the remaining portion of your stocks left in your portfolio will again rise in price as time goes by. Now, you have the best of both worlds. You have some valuable current stocks and some new stocks that you purchased for cheap; both of which, are now poised for major growth! The only way is up.
What are a few things that the rich invest in?
1) Hedge Funds
2) Options
3) Real Estate
4) Businesses
Using hedge funds and options allows you to protect your investments from certain losses. When you invest in these, you are putting protection around your investments.
Investing in real estate and businesses offers a great degree of financial leverage. Wealth can be amassed very quickly with a proper investment in these two areas.
If you are interested in using investing as your wealth creator,
then I would urge you to take action NOW, so you can see the positive effects that you can generate by putting these things into practice.
To create wealth, you must be educated on the correct concepts to
achieve monetary success. You must have a system that applies the
principles of leverage, so that you may succeed at lightning speeds.
Lastly, one of the best things to do to keep a stream of income
constantly coming in and even rising in value, is to continue
your education in your chosen field. It feels great when you
finally earn a profitable income, but if you don't stay ahead
of the curve, with continual education, your wealth creation
vehicle may become outdated or overtaken in an instant.
Find your wealth creator, learn about it constantly, and
Work hard to achieve success with it. You can do it!