International Investing to Build Wealth
Getting rich is easy!
The key to building wealth is to apply three simple investment concepts. They are easy to do and completely painless! Best of all, if you can follow these guidelines, you’ll have the financial abundance that you deserve. These simple, yet powerful keys to wealth are:
1. Pay yourself first.
2. Make time work for you.
3. Make market fluctuations work in your favor.
Pay Yourself First
Finally a budget that works! Many investors spend hours tracking their expenditures and trying to figure out how much they will have left at the end of the month. They know that at least in theory they should have some money left over for investments. But month after month they find themselves with nothing to put away for a more abundant future.
Why does this happen? Simply, it is human nature. For many people saving is difficult and we are tempted to spend money because it’s there.
So what’s the solution? Set aside at least 10% to 15% of your monthly income and have it go out of your account automatically at the beginning of the month. DIY Offshore will help you invest that money before you can spend it on something else. Doing this, you take care of all your budgeting problems and ensure that you will be able to accumulate large amounts over the long term.
The nice thing is, very quickly your spending habits will adjust to your funds available, and you won’t even notice a change in your lifestyle.
Put Time on Your Side
Nothing on earth does more to ensure financial prosperity than putting time to work on behalf of your investments. This is commonly referred to as the power of compound interest.
Compound interest refers to the situation where interest is being built upon previously received interest. For example if an investor receives an ongoing annual 10% return on a $100 investment then they receive $10 the first year. But the second year of return produces $11 because it builds upon both the original investment AND the growth received in the previous year.
Continually building interest upon itself is the easiest way for people to build huge wealth. Put time to work for you!
So what does compound interest mean for YOU? At 10% average annual returns your money will DOUBLE (!) in just over 7 years.
Someone who is at their 30th birthday will see their money double approximately 5 times by age 66. In this example, an investor earning 10% average returns and starting with $100,000 at age 30 would see it grow to about $3,000,000. Just in time to retire!
Even more amazing is how younger people can make time work on their behalf. Imagine an investor who turns 20 years old and invests only $400 every month. If they invest steadily until they retire at age 65 and receive 10% per annum returns then their retirement nest egg builds up to more than an incredible $4 Million Dollars! This is what happens when investors put the power of time to work on their behalf.
Winning in a Down Market
We all know that markets don’t go straight up all the time. In reality, markets spend a lot of time moving sideways or downwards. Smart investors make these periods of contraction work hard in their favor.
If your investments are diversified then a falling market can be your best friend. This happens when investors contribute a fixed amount regularly. Refer to the illustration below:
You can see that with Fund A, as prices rise, invested sums gain value. However, the number of units that can be purchased each year is reduced (because the price goes up).
Fund B starts out with negative performance. As the price of the fund falls, the investor can purchase continually more units each year. In fact when the fund reaches its lowest point, the investor receives 5 times more units than when they started.
As Fund B recovers only back to its starting price, the total number of units purchased is significant and adds up to a huge profit.
After just 10 years the total number of units from Fund A are 4,840. And the total number of units in Fund B are 26,580. At their final pricing values you can see that Fund B provides significantly higher total return. Fund A has total value of $14,520 and Fund B has a total value of $26,580!
DIY Offshore is proud to work with investors of all sizes and circumstances. For information about international investments and global pensions, register using the form on the top left of the page. Learn how to invest offshore easily and effectively.
