There are two ways to make money in our modern world. The first way is to earn an income, either by working for yourself or for someone else. The other way to grow your fortune is to invest your assets so that they increase in value over time. Whether you invest in stocks, bonds, sport trade, mutual funds, precious metals, real estate, small business, or a combination of all of the above, the objective always to generate cash. This can come in the form of increased value to the investment, dividend income, or the sale of a business or some other liquidity event.
Income provides as the natural starting point for investment planning because you can’t invest what you don’t have. The first career job issues a wake-up call for many young adults, forcing decisions about IRA contributions, savings, or money market accounts, and the sacrifices needed to balance growing affluence with the desire for gratification. Don’t worry too much about setbacks during this period, like getting overwhelmed by student loans and car payments, or forgetting that your parents no longer pay the monthly credit card bill. Outlook defines the playing field on which we operate during our lifetimes and the choices that impact wealth management. Family planning sits at the top of this list for many individuals, with couples figuring out how many kids they want, where they want to live, and how much money is needed to accomplish those goals. Career expectations often complicate these calculations, with the highly educated enjoying increased earning power while those stuck in low-level jobs are forced to cut back to make ends meet.
It’s never too late to become an investor. You may be well into middle age before realizing that life is moving quickly, requiring a plan to deal with old age and retirement. Fear can take control if waiting too long to set investment goals, but that should go away once you set the plan into motion. Remember that all investments start with your mindset, whatever your age, income, or outlook. That said, those investing for decades have the advantage, with growing wealth allowing them to enjoy the lifestyle that others cannot afford.