There are two ways I know to become well off without earning a lot of money. 1. DRIPs...Dividend Reinvestment Programs...The one I would recommend that I have been into since 1979, XOM Exxon Mobile, current stock price is about $90 per share with a $2.92 dividend. I would recommend putting it in a Roth IRA, pay taxes now, not when you retire. I have been in this stock long enough that it has split 7 times. 2. By fixer upper houses and renovate them while living in them...Tax law says that if the home is your primary residence for two years out of the last 5...that a single person can sell this and not pay taxes on up to $125k capital gains, married couple $250k. And you can do this every two years. My current net worth on paper is over $2 million though my wife and I have never made over $90k a year.
Good strategy but I would buy an S&P 500 index fund instead of XOM. Oil companies are not too big too fail over the long term.
I don't like index funds because they do not pay dividends each quarter. I personally prefer individual stocks, all are risky yes, but some like your electric company are near monopolies. We bought into PG&E when I was stationed in Las Vegas, a lot of people do not know that power companies and many utilities are required to pay out approximately 90% of their profits to share holders. So while it has never been a stellar stock for share price, it's dividend is over 3% which when compounded every quarter is actually more than 5%.
Many of the S&P 500 ETF's now offer quarterly dividends. Although, dividends are really meaningless because they are subtracted from the share price. They do provide income without having to sell shares but that is a minor convenience. Supposedly dividend stocks outperform over the long term but that is because they are usually value stocks rather than growth. There is a value and a small cap premium. I like the ETF's: VTI : Total Stock Market, VXUS: Total International, VBR: Small Cap Value, VSS: International Small Cap, and BND: Total Bond Market. CD's are also sometimes useful in retirement for guaranteed gains although they barely keep up with inflation. Some people also like emerging markets : VWO, REIT's : VNQ and TIPS : VTIP, but I am not sold on them. It is very important to also hold bonds especially as you get closer to retirement. Just look at what happened in 2008. If you're going to buy individual stocks you should probably own at least 20, so if one goes belly up you're only out 5% but at that point you're better off with an index fund. I recommend the bogleheads financial forum. https://www.bogleheads.org/
There are as many investment strategies as there are investors. I wish you luck with yours and hope you will retire as rich as I will. I just turned 55 last month and am wondering why I am still working, if it wasn't for the extreme penalties of withdrawing from my IRA early, I would already be in Alaska enjoying the good life of no property taxes and hunting and fishing. My kids will inherent the rental houses when I move North, we'll maintain our one house in Austin, and one in Las Vegas...Most of the year will be spent in Alaska.
"Net worth on paper" is not the same as liquid assets. The previous messages all presume having money and/or credit to begin with. The best example I know of how to get rich is a woman we know who started an online business for less than $100. 6 years later she has probably land, property, buildings, houses, and personal property worth at least over $100 million, around $400 in domestic and shore accounts, T-notes and bonds, and about $25 million in physical gold and silver. She recently down tuned her business(es) so not to consume more than 2 hours a day of her time, 5 days a week, plus taking holidays and vacations. So her net pre-tax income has dropped to only about a quarter million a day, every day of the week. None of her businesses are incorporated and she has virtually no management structure other than managers for each task area at each location (office manager, warehouse manager, production manager. No marketing, legal, or any other such bureaucratic departments.) Debt free. Private business is still the #1 way to get wealthy, though it also possibly the highest risk way too.
Most people fail at get rich quick schemes. You can work a basic job, be frugal, and save in an IRA/401k and retire a millionaire. Although 2 million is the new millionaire with the price of things going up.
The only way to become wealthy without money is to give away everything you have and want nothing from anyone. I have been reading a wonderful book by a female Indian writer about a wealthy son who gave up his life to become a Jain. It is quite a read.
Sounds nice. Consumer culture really has us thinking we need the latest car/phone/gadget/biggest house. I really liked Siddhartha by Herman Hesse. We can't all be Buddhist/Hindu monks though. Someone has to do some work and if you're going to work you might as well make enough money to afford your own Zen Temple
Thanks for the link, very helpful site. - - - Updated - - - Of course you are right but my point is that the less you own or need is more important than net worth which I think most folks that get into their late 50s start to realize. Quite simply, the key to having money is not to spend money.
This is very wise. I think it was Mr. Miagi that said the best way to win a fight is to not get in one. The best way to save money is not to make a lot of money but to not waste the money you already have. However, I know many people that take being frugal to an extreme and are not fun to travel with. I know other people that made good money but blew it all while they were young having fun. The ant and the grasshopper fable comes to mind. "Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery."
Agreed. I am not an ascetic and like to travel well but I do know how to travel smart. I consider myself a generalist, I know a little bit about a lot of things. But I consider myself an expert on one topic alone, international travel. I did International Sales for almost 13 years, spent over half the year abroad. Prior to that, I traveled extensively on my own nickel. Traveling cheap is smart when you are young, it gets a bit trickier as you age since the creature comforts mean a lot more to you. As with everything, moderation is the key.
I never knew that you could sell your home every two years and have a $250,000 capital gains forgiveness. I might just be using your scheme.
That's for a married couple, and if you are handy and can do some of the restoration work yourself, you will save a ton. My wife and I bought our last home for less than $100k in the Austin area, rehabbed it and sold it for $219k two years after we purchased it. The best advice I can give you is to find distressed homes that need work with comps that are at least 60% higher than what they are asking for the property. And get an appraisal done on the property by a professional, this will usually cost you around $500, but it could save you thousands down the road.
Well... no. I'm okay at fixing things, but I just bought my first house 2 years ago, and it has gone up 45k on zillo. I also put $6k of work into it, mostly painting. I think I can take profits now and try to renovate a 100k home, just like you said.
Do not rely on Zillow estimates. While better than they used to be, they are still significantly off in my area, especially when it comes to their rental value estimates.
Well I bought mine at 15k less than the zillow estimate, and it was in need of a lot of work. It's no longer in need of such obvious work, and I can make it look even better before the 2 year point... But you're right. I'm going to get it appraised.
You can mow a single lawn each weekend and retire a millionaire. You can spend every Saturday on the off-ramp with a cardboard sign, and retire a millionaire. The key is to start young, and consistently fund your retirement. If you start when you're 16, and you can consistently put away $50 per week into a ROTH IRA, and can manage an 8% return in your portfolio, when you're 60 you can withdraw without penalty and you will have $1,002,314.61 to retire on. If you then invest that $1,002,314.61, and can manage an 8% return, you'll pull down an $80K annual capital gain forever until you die, AND, you can hand that $80k/yr to your kids in your will. ...all by mowing one lawn per week.
This strategy takes discipline. This is something I never had. I am retired now and I do a lot of things that keep me from spending money and keep me involved in the process of living. I have a garden to grow produce. I raise chickens and goats. I have also found that buying a head of beef and having it butchered saves a ton of money on meat. .75 cents a pound for a cow, .60 to have it processed. And if you have a pasture you can buy a calf heifer pair ....wean the calf...eat the mother....and later on...eat the calf.
I know of a set up locally in which Zillow estimates for a house that needs to be bulldozed is higher than the one beside it that was recently renovated. I have no idea where they get their data, but it can be quite ridiculous. The Zillow estimate for my house is about 50% above assessed value and the assessed value on my house is probably a little high to begin with. In ur area, at least, they tend to be way off.
Or just barter smart. Man Trades Up From Paper Clip to House - - - Updated - - - Started late and even later again after a divorce (I don't recommend them unless your spouse is nuts).
I'm pretty sure that they're just using the assessed and sold values and then creating an average based off of some algorithm. However, my ziestimate was $165k when I bought the house, and my appraisal was for $159k. I've put in $6k-$7k, and it looks a lot nicer than when I bought it, that plus the area and economy have been booming since I bought it... and that looks like it might slow down some in the future. Additionally, I have some expenses coming up where I could use the additional cash flow. So basically, I think it's prime time to sell.
Most everyone lacks the required discipline, my former self included, which is why the vast majority of people do not retire with enough wealth and have to depend on social programs when they can no longer work. It is not because they could not do it... it's because they DID not do it. Any able-bodied person with a day per week to spare can retire wealthy, if they are disciplined, start early enough, and there is someone to show them how. Most (all?) teenagers assign more value to vanity than retirement planning. Even when they have someone who can point out the way and encourage them to save, they will still rather have that $50/wk for beer, or to purchase, on credit, a set of chrome rims for their car and spend the $50/wk that WOULD be building wealth, making payments+interest instead. Jewelry, designer clothes, etc... All to impress others, at the expense of ones future solvency.
