Yesterday, I had a discussion with a young lady who recently started her very first job after completing the masters. She was keen on seeking guidance on how she can build wealth responsibly. It was heartening to see someone young seriously thinking about finance, understanding the power of financial knowledge, showing the interest to learn, willing to ask opinions, and above all, using the most powerful tool in the world to improve the financial stature, i.e., time!
Life is simple and human beings tend to make it complicated. It is nothing different when it comes to finance as well, I believe. That was one of the main suggestion I could give it to her during our discussion. It reminded me of the very popular book from J L Collins, “The Simple Path to Wealth: Your road map to financial independence and a rich, free life”. The author had written a series of letters to help his teenage daughter to learn the nuances of finance and the book grew out of those letters. I hope that one day, I could write something similar for my daughters based on my knowledge and experience!
In the book, J L Collins describe some very simple, but effective methods to invest, to help money work for you, and to build the wealth. I highly recommend this book for anyone who is exploring to keep their finances in order.
Here are some key takeaways from the book:
Sound investing is not complicated. Which goes back to what I said at the beginning of this article.
Spend less than you earn – invest the surplus – avoid debt.
Avoid fiscally irresponsible people!
Money can buy many things, but nothing is more valuable than your freedom
It’s important to know that compounding takes time, so it helps to start young.
It’s simply not possible to time the market.
Keep it simple!
Most of us are, or should be, long term investors.
Debt is normal.
Finally, you would need two index mutual funds to build. Read the book to identify which ones 😊
I found this boo to be very simple, straightforward and to the point in terms of what is needed for anyone. Even when we have very sophisticated tools in the market to dissect, analyze left and right to help you decide which investments would be the best in the stock market, sometimes, old school methods are more than sufficient if you have the patience, determination to become rich.
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