Thursday, March 27, 2008

The fundamentals of a secure future

What do I think are the keys to a financially secure future, they are as old and timeless as money itself and have been written about endless in so many books. But maybe because they are simple and boring most people ignore them and focus on the next best thing or a get rich quick scheme.

Here is what I think is the fundamental basics

    1. Save at least 10% of your income (before paying any bills)
    2. Live on less than you earn
    3. Invest in secure assets that grow over time
    4. Reinvest the returns
Thats it in a nut shell, not complicated or sexy or even exciting. The only hard part is number 3, finding good assets to invest in. The rule of thumb I use is will this company still be selling it's products or services in 10 years time or will this property still be a good rental in 10 years. I'll talk more later about finding quality assets.

Over time this method virtually guarantees results because to do this you will become disciplined saver, live within your means, and have assets that independent of you appreciate in value.

There are 2 other parts that I'll write about later, Financial Education and Leverage these are the keys to unlocking future wealth. But without the basics everything else becomes meaningless. You must build a secure foundation before building wealth.

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