Everyone gets hit with the "get rich quick bug". However, this is not the usual path to amassing large wealth.
Wealth is a long-term game. Those who seek quick riches can find themselves busted before long. Those who take the decades approach will locate greater flexibility with less risk.
Let us be honest here, 40 years is a long time. The average working person put in more than 4 decades before hanging things up. This is a considerable amount of time to put money away while earning some great returns. Compounding is certainly our friend.
Kevin O'Leary, of Shark Tank fame, has a simple approach. He believes that everyone should put $100 a week away. If this is done, one will be wealthy upon retirement.
In other words, building wealth is not as much a science as it is discipline. Simply taking the opportunity to "pay yourself" every week will add up over the ensuing decades.
Warren Buffett liked to operate using his famous two rules. Rule #1: Don't lose money. Rule #2: Don't forget rule number 1.
What this means is to avoid the large drawdowns. This can be a problem for those who are seeking to strike it rich in a short period of time. An approach of this manner often leads one to take chances, entering positions he or she should avoid.
The slow approach is boring. This does not ring true with the CNBC, Fast Money type crowds. However, when looking to amass wealth, boring is often the best path.
Putting $100 a week into the stock market is not very interesting. It will not give one a great deal to brag about at dinner parties. Nevertheless, a quality stock amassed over time can grow into a powerful holding over time.
By the same token, we could operate on the same premise with Bitcoin. If one is buying this asset each week, even $100 worth, the individual will see his or her account explode over the next decade or two.
The aforementioned Buffett has gained the title as "Greatest Investor in the World" by earning a 20% return each year. Everyone wants to discuss the 100% and 200% returns to discuss at dinner parties. However, consistency over long periods of time can add up.
Another factor in this is the idea of expertise. By putting $100 a week into the market, one can get very focused with his or her investments. What this means, is that a person in this position is likely only going to opt for one or two investments. This allows for one to amass some expertise.
By knowing the investment, inside and out, one can feel confident putting money in on a weekly basis. Of course, if something changes that is to the negative, one can always sell and move onto something else. Investment that are winners over 5 or 10 years can turn into losers for a variety of reasons.
Nevertheless, the key is to be in the game. Unfortunately, most do not have vast resources to enter. For this reason, the idea of small amounts consistently put it will add up over time. This is the best way to put compounding into action.
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