The definition of wealth is in the eyes of its beholder. For some, wealth is living in a big house and travelling round the world. And for some, it is the ability to pay their bills on time and still have enough left over. For some still, wealth to them is when their passive income can pay their bills and luxuries. You must define what wealth means to you.
After defining what wealth means to you, the next step is to determine how you will get there. Mere wishing would definitely not take you there, you must take actions. By budgeting, clearly stating out your goals (backed with a plan), proper cash flow management, discipline, proper mindset, investing, you can attain your definition of wealth.
The best time to start building wealth is to start early. I keep saying this time after time, especially to young people- start your journey to building wealth early. In this post, I’ll explain some benefits of starting early.
You do not have so much responsibilities. You can afford to put aside more of your money into investments at this period. Yeah, this period should not just be to accumulate trendy items in your wardrobe, also, actively build wealth at this time. By putting aside as low as N5,000 every month in money market instruments, you’d be surprised by how much you have accumulated by your 40s or 60s.
You can take a lot of risks. The greater the return, the greater the risks. However, the level of risks a person takes largely depends on the age bracket of the individual. People in their 20s and 30s can still afford to take more risks than those in older age bracket.
Compounding will be of much advantage to you. I discussed “The Power of Compounding” few posts ago. This simply means that your interest earns interest, so, both your principal and interest earn interest.
You prepare for your retirement in time. By starting early, you have a lot of time to prepare for your retirement.
So, here’s Tim and Tom. Both, close friends, are aged 20 years.
Tim decides to start building wealth early by setting aside N50,000 annually for the next 10 years, by then he’ll be 30 years. After this, he leaves the money to sit till he’s 45 years.
Tom, on the other hand, waits till he’s 30 years and sets aside N50,000 annually for 15 years when he’ll be 45 years.
Tom is investing more money than Tim, right? Wait till you see the results.
Assuming both earn interest of 10% per annum, at age 45:
Tim – Investing N50,000 annually for the first 10 years will accumulate N796,871. After this, he leaves this money to sit for 15 years. He does nothing but his money keeps earning interest. At the end of this 15 years, he’ll have accumulated N3,328,728. Amazing right?
Let’s look at Tom. Investing N50,000 annually for 15 years will accumulate just N1,588,624.
Wow!!! Did you see that? Didn’t Tom invest more money than Tim?
That’s the power of starting early, taking advantage of the power of compounding.
Don’t wait any longer. Start your journey to wealth today!
We believe in you!
To your financial independence and freedom.