Do you know how to invest like a millionaire?
Well if you want to be a millionaire then knowing how to invest the right way is essential. It can literally mean the difference between achieving millionaire status and failing.
I know a number of millionaires and I have interviewed them to find out what their investment secrets were. They were actually happy to tell me and I use a number of these strategies myself.
It is likely that you will need to make some lifestyle changes as well as make the right investments. What do I mean by this? I will explain all in the post but millionaires usually have specific habits that help them to maintain their millionaire status.
The good news is that the vast majority of millionaires made their money from nothing. If you are in the property investment business (or strongly considering becoming involved) then this is a great first step.
What I discovered from talking with the millionaires that I know is that there is no “secret formula” that many want you to believe. It is all about making the smartest decisions with your money and nothing more.
I came to the conclusion that millionaires think differently than others. They see money in a different way to most people. Initially they work for money and then money works for them. If there is a secret then I guess that is it.
Here are the seven steps to invest like a millionaire:
1. Be Conservative with your Money
If you are reading this while the coronavirus pandemic is still around then you may have already made some changes to how you look at your money. This is good but millionaires do this all of the time even when times are good.
You will rarely see a millionaire gambling recklessly with their money. They all tend to be rather conservative about finances and you need to adopt the same attitude. The majority of millionaires will pay more attention to avoiding risk than they will on the money making potential of a particular investment.
By adopting a similar risk prevention attitude you will be much more likely to keep hold of your money and grow it. You need to always bear in mind that if you take a really big risk you could lose everything. Of course this doesn’t mean that you shouldn’t take any risks – you can’t be a successful property investor if you don’t do this.
It is a matter of being strategic about the investments that you make in the property market and elsewhere. You need to learn not to get blindsided by opportunities that have a potentially large return. Maintaining a cool head is essential with all investments.
2. You need to Diversify
Don’t put all of your eggs in one basket. If the basket breaks then you lose everything. You need a diversification strategy with property investment and any other investments that you make. Relying on one thing is far too risky as things can (and do) go wrong. There are no investment certainties.
A lot of the millionaires that I have studied and spoke with invest in stocks. All of them invest in property! They have a diverse portfolio for their stock investments and they have a portfolio of properties making money for them.
Millionaires know that there are no investment certainties so they go for investments that have the least risk. When they purchase stocks they tend to go for companies seen as having the lowest risk both domestically and overseas.
Younger people can afford to make more risky investments because they have time on their sides. As you get older I recommend that you concentrate on minimising the amount of investment risk. I am certainly at that stage in my life.
3. Get yourself a Mentor
I have said this in many of my posts. If you want to be a millionaire in the fastest possible time then get yourself a good mentor. In the beginning I tried to figure out this property investment thing all by myself and I experienced a modicum of success.
When I found a good mentor I was able to take my success to the next level. You need to find a member that is ahead of you in terms of what you want to achieve. I would recommend at least 5 years ahead. They need to possess the talents that you crave to become a millionaire.
Before you commit to any mentor have a list of questions prepared and ask all of the people you are considering to answer them. Let them know where you are right now in terms of your achievements and the challenges that you are currently facing. Ask them to comment on how you should move forward.
It might take you a while to find the best mentor and it will cost you money but it can certainly be worth it. They will be by your side throughout your millionaire journey and will help to keep you going no matter how tough things get.
4. Keep it Simple
Do you tend to overcomplicate things? I certainly used to and it definitely held me back. A lot of people believe that millionaires have some really complicated investment strategy that includes offshore banks, complex tax saving plans and more.
Some millionaires may do this but most will not. They prefer to keep their investments simple. At the heart of this simplicity is a good investment plan. Most millionaires know what they want in terms of risk and return. Do you have this kind of certainty?
How quickly do you make decisions? Have you decided what you will eat for dinner today? When you make this decision how much time do you spend on it? Do you agonise for a long time about what to eat or do you just know what you want? Do you see where I am going with this?
When you have an investment plan that spells out what is an acceptable investment for you then you can make decisions so much faster. This is particularly important in property investment as you can find yourself looking at many investment opportunities at any one time.
If a property does not match your investment plan quickly move on to the next opportunity. Successful property investment is about taking calculated risks. Can this go wrong sometimes? Yes of course it can – but it is a lot less likely than if you just dive into investments because the thought of the large return is your only consideration.
5. Invest in Appreciating Assets
If you make a lot of money what will you do with it? Will you treat yourself to that fancy car with all of the bells and whistles that you have always wanted? What about flying off to some exotic location and living the high life? These things are OK as a one off but you do not want to get into the habit of buying everything that you see.
Why do you think big lottery winners lose their winnings fast? They are attracted to every shiny object that they see and in no time at all their money is gone. Sure they had a good time in Las Vegas and driving those fancy cars. But now they have nothing left.
Society paints millionaires as having all of the latest things that are out of the reach of ordinary people. But the truth is that most millionaires lead fairly boring lives. They don’t jet over to Vegas every month for a gambling binge and they do not buy expensive cars because they know that they depreciate rapidly.
Property investment is all about investing in appreciating assets. Sure the value of properties can go down as well as up, but over the long term there will usually be appreciation. When you invest in property make it work for you by renting it out to others.
Most of the millionaires I spoke with lease their vehicles. They know that a top of the range Mercedes Benz (or any other luxury car) will depreciate significantly in the first year and continue to do so. So they make the smart decision of leasing rather than buying.
They still end up with the car that they wanted but do not have to suffer all of the depreciation. It’s all about making the smartest moves. If you are a habitual buyer of things that do not appreciate in value it will be a lot harder for you to maintain your millionaire status.
6. Get Expert help
I have already recommended that you hire a mentor to help you to achieve your goals and become a millionaire. But you need to go further than that. If you need help then never be shy to ask for it even if it costs you money.
You can’t be good at everything. I am a successful property investor but I have experts on my team that I turn to for advice for a number of different things. This includes a top financial advisor who helps me to manage my money and invest in the right way.
I have never claimed to be an investment expert and I have no desire to be one. My focus is property so I channel all of my energy into that. I urge you to do the same thing and build a team of experts for your investments.
7. Commit to Learning
Although I am a big believer in experts I always take responsibility when it comes to the final investment decision. It’s my money at the end of the day and sometimes experts can get it wrong. So I take the time to study the different strategies so that I know what my advisors are recommending.
It doesn’t make me an expert but at least I know what I am getting into. I would never blindly accept the word of an expert and just do what they say without doing some research first. And I strongly recommend that you do the same.
All of the millionaires that I spoke with and that I have studied are committed lifetime learners. They do not waste their time spending hours on social media. Instead they read books and use the Internet for learning. I strongly recommend that you become a member of the lifetime learning club.