My retirement fund is growing and I was curious to find out how millionaires invest when they made their millions. And a quick google search revealed a ton of reports based on interviews with real millionaires and billionaires from around the world.
Invest like a millionaire
One of the most important realizations is that most millionaires invest the majority of their wealth in assets that grow in value over time rather than assets that depreciate in value. And that seems logical, because after making their own fortune, keeping it would probably be the first priority for most. I think of the old saying “money comes to money”.
Of course, most millionaires aren’t stupid. Otherwise they would not have built up their wealth in the first place. And it may come as no surprise to learn that most wealthy people choose mainstream real estate and stocks as their home for most of their wealth. Both classes of assets have the potential to deliver growing returns over the long term.
And much of the multi-million dollar wealth is in stocks that are publicly listed on the stock exchange. As with all investors, the level of practical implementation of investment strategies varies from person to person. Some millionaires are content with putting their fortunes in tracker funds. Others choose managed funds and investments. And some love the challenge of investing, trying to outperform the general market by picking individual stocks.
My own approach would be to spread the money between all of these options. I would strive for diversification of the investment strategy in addition to diversification between the underlying companies.
The Keys To Building Wealth With Stocks
Of course there are as many ways as you can imagine to get the millions. But a common theme among today’s self-made wealthy is that they have been careful with their money on the way up. It almost goes without saying that they have saved a lot and kept their expenses well below their income. Even so, many lived comfortable and rewarding lifestyles while building their fortunes.
The good news is that building a millions fortune by investing is absolutely possible. We don’t all have to be the bosses of companies with half a million salaries a year to save a million. Many people earn an average salary, invest well, and build their wealth into a seven-figure sum over time.
I think the key to prosperity is avoiding heavy losses and multiplying profits. And we don’t have to find the next big super stock to make good money investing. With compound interest effects, excellent returns can be achieved over a long period of time.
So, to build wealth and gain financial freedom, I would use the very same vehicles that millionaires use to maintain their wealth. Namely index tracker funds, mutual funds, managed funds, and the stocks of companies with high quality underlying businesses.