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How to Become a Better Investor

Updated on August 25, 2007

Investing is the process of using your resources to generate more wealth. It is the single most important financial process in a capitalist society, because it enable the accumulation of wealth. This is a process that has transformed millions of people from humble beginnings to high levels of prosperity and wealth.

However, despite its importance, few people really understand the process of wealth creation. They see investing only as an obligation, something they need to do in order to retire, and not a creative, dynamic process that can enrich their lives and the lives of people around them.

How to become a better investor

There are several paths involved in becoming a better investor, but you will notice that it aways start from the desire of making more of your own resources. Making a fortune is a process that depends primarily on being focused and use the opportunities to achieve the desired income levels.

Therefore, the first step is to convince yourself that you want to become rich. If you set this goal, you will look for opportunities to make this happen in whatever are you are in. In fact, in each area of human work there are thousands of opportunities to make money: you just need to determine that you want to find such opportunities and use them.

Balancing your life

The second important thing you need to become a better investor is to balance your life. he most tragical mistake for low income people is that they always spend more than they make. This difference between what they made and what they receive will always come later in the form of high interest rates, lost of opportunities, and plain lack of resources. If you spend more than you receive you will always be in the need of more resources, and will loose any chances of making your money grow.

Finding money to invest

There are two general ways to find money for investing. The first is to save money, and the second is to make more money. Of course, if you have low income, unless you are intending to live an ascetic life, you will not have enough money to save. In that case, you should look for ways of increasing your income, such as finding a different job, or opening your own company.

However, even if you have a very large income to live, saving is always part of the process. Basically, if you spend more than you make, there is no way that you will ever find money to invest.

A big mistake that many people do is to think that making a lot of money (with a job) is the best way to be wealthy. In fact, it is better to make less money and invest some of it than making a lot of money and spending all of it.

Simple tricks that might work

There are simple tricks to find some money to invest that could work for you:

  • Take some money from your paycheck and send it automatically to your investment account. This can be done nowadays with a simple form that you fill with your employer
  • Maximize your contributions to the 401k. This will guarantee that you don't have to pay taxes on all your income - this is money that will be allowed to grow tax free. Moreover, if you company matches your contributions, if you are not maximizing your contributions you are leaving money on the table.
  • Start a side business: you can start your business life without leaving your day job. You just need to find your passion and use it to make some money.

Never give up

Investing is a long term decision. You need to start thinking in the long term, instead of for the immediate decisions. It will take some time for you to adapt, but it will also change your perspective of work. I am sure that you will find this new approache to life even more rewarding.

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