It’s only natural to reach a point as an investor where you wonder if the time and stress you’re giving to investing is worth the returns you’re receiving.
Maybe you’ve been investing for years and don’t feel like you’re any closer to reaching your goals. Or maybe you’re a newly Accredited Investor who feels overwhelmed by the number of opportunities available to you.
The truth is, most people go their whole lives without learning the fundamental principles that can help them achieve investment success. And it’s not your fault. They don’t teach these things in school, and if you’re the first person in your family to build wealth as an investor, it can feel like other people have a major head start.
While there’s no one right way to invest your wealth, there are a few principles that show up over and over again among the wealthiest people in the world. These people have learned how to build wealth that lasts, without sacrificing the things that matter most to them. If that sounds like something you’re looking for, here are 3 key principles that we can learn from the ultra wealthy.
1. Focus on Long-Term Investments
Ultra wealthy investors know that their highest returns will likely not come tomorrow or even next year. Instead, they’re focused on investing for the future.
Strategies like day trading, or putting most of your money into exciting new asset classes like cryptocurrency, may seem tempting. After all, wouldn’t it be great to wake up one morning and find that your wealth has doubled? Unfortunately, these strategies rarely deliver the results you may expect. Plus, they take up an enormous amount of time and are subject to the highest capital gains taxes.
If you’re truly focused on building wealth that will provide for you throughout your life, and for future generations, then one of the best ways to do that is by prioritizing long-term investments.
This could mean purchasing real estate and waiting for its value to appreciate over time, instead of selling as soon as the market gets hot. Or, it could look like buying stock in stable companies that may not be growing rapidly today, but will likely increase in value as the markets rise over time.
Ultra wealthy investors know how to be patient, and they also know that the most important first step to investing is to focus on your long-term goals and look for the opportunities that can help you achieve them.
2. Prioritize Tax Efficiency
No matter where you work or how much money you have, one thing is always true; the more money you make, the more you’re expected to pay in taxes. Or is it?
The main characteristic that sets ultra wealthy investors apart is that they’ve learned the secret to minimizing their tax burden while still increasing their wealth.
There are many strategies for building a tax efficient portfolio, but one of the best (and also the least known), is investing in government-incentivized efforts like the building of carbon capture technology.
These unique opportunities allow you to reduce your taxable earned (W-2) income so that you pay less income tax, while also allowing you to invest passively.
3. Work Less to Earn More
Passive income is a phrase that may make you roll your eyes. It’s become such a buzzword in the investing world and is often associated with investments that seem too good to be true. But the ultra wealthy know that investing passively is more than just a trendy marketing phrase, it’s the key to true wealth.
The more money you earn or the further you advance in your career, the more you come to understand that your time is one of the most valuable resources. And while you can’t add more hours to the day or years to your life, you can make sure that your investments are generating wealth for you in the background, even without your day-to-day involvement.
When evaluating a new investment, think about the work and time commitment it will require. Are the returns worth the number of hours you will spend? Or, is there someone you can hire to help you manage the investment? Sometimes paying people to help you is the best way to build wealth without sacrificing more of your precious time.
No matter where you are in your journey as an Accredited Investor, it’s important to find the right people who can help you reach your goals. If you’re interested in learning more about the ways First Generation Capital Partners can come alongside you with unique investment opportunities and support, fill out this brief form to get in touch.