If you’re looking to double your net worth, you probably can’t do that on your current salary. Like many people, you probably assume you need to get a much higher-paying job, but that isn’t necessarily true.
According to Jaspreet Singh — founder of “The Minority Mindset” YouTube channel, with more than 1 million subscribers — investing can help you achieve your financial goals. Here’s some advice from his “Guide to Cash Flow and Passive Income” e-book to get you started.
Change Your Spending Habits
When you earn money, you have the option to save it, spend it or invest it. Singh noted the importance of having savings to fall back on, and he recommended having 3-12 months of income put aside.
He suggested following a 75/15/10 financial system for every dollar you earn. Following this approach, you would spend a maximum of 75 cents, invest a minimum of 15 cents and save a minimum of 10 cents.
To find success in this method, he advised creating three bank accounts and automatically sending the correct allotment of money to each one.
Choose Your Risk Level
There are plenty of different places to park your money. Singh cited savings accounts and certificates of deposit (CDs) as the safest option, followed by traditional investments — e.g., stocks and real estate — a business idea and lottery tickets. However, he said low-risk options offer a low return.
If you opt for a traditional investment, he emphasized the importance of sticking with it during recessions and economic downturns. Many people panic and sell their investments at a loss, but he said this is the time to buy more at a discounted price.
“More millionaires are created during market crashes than any other time,” he wrote. “This is because market crashes create a great buying opportunity.”
Learn the Different Ways To Get Paid
When investing, Singh said there are two ways to earn money: appreciation and cash flow.
When your investment grows, it appreciates. As a long-term investment, he said, appreciation has a higher risk, because you don’t earn money until you sell.
Conversely, cash flow puts money in your account for simply earning the investment. While this might seem more favorable, he noted that you have to pay taxes on earned income.
Additionally, he said, when a company pays you money, it’s less cash they have, which can stunt their growth. Therefore, the business likely will grow at a slower rate than one that opts to invest in growth instead of paying investors.
Decide Which Kind of Investor You’ll Be
You already have a job, so you might not be looking to become a full-time investor — and that’s OK. It’s up to you to decide how much time you want to commit to your investments.
Singh said there are two types of investors: active and passive.
If you opt to become a passive investor, your work is basically done after choosing your investments. However, if you decide to become an active investor, he said, you’ll need to dedicate time and effort to monitoring and management your investments.
Generally speaking, he said, you have a better chance of earning higher returns with active investments. This is because you’re assuming some risk and dedicating time and effort to the cause.
If passive investing is more your style, he said, you also can become wealthy by taking this largely hands-off approach. The key to success is to make the investment and forget about it, instead of stressing about daily ups and downs in the market.
While investing your hard-earned money might seem intimidating, this is ultimately the best way to double your wealth without quitting your job. Never invest more than you feel comfortable investing, but don’t be afraid to take a bit of a risk.
Larger risks tend to come with larger rewards. Singh emphasized this point, so find investments you feel confident in and put a dollar value behind them that can bring you the higher net worth you desire.
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