So, you want to turn your $10k into $1m? Sounds like a plot for a financial thriller, right? Well, the first step is to turn the $10k into $20k and then $20k into $100k. Let's break it down into seven practical, less dramatic steps that could actually get you there. No cloak-and-dagger stuff here, just straightforward thinking that’s worked for us (and some others who helped write this)..
- Bet on Yourself
First off, invest in yourself. Sounds clich', but hear me out. If you can increase your earning power, you're already ahead. Maybe that means learning to code, diving into digital marketing, or getting certified in something that's in demand. The more you know, the more you can grow your income, which indirectly grows your investment potential.
- Read These 3 Books… Now!
The leads on from Step 1 above – if you only do one thing from this list, it’s this… read at least one of these books. They really are the first step in changing your relationship with money.
Rich Dad Poor Dad by Robert Kiyosaki - This book contrasts the financial philosophies of two dads: one who believes in traditional education and employment (Poor Dad) and another who emphasises financial education and investing (Rich Dad). It's an easy read that introduces concepts like assets, liabilities, and the importance of financial literacy in a narrative style.
The Total Money Makeover by Dave Ramsey - While primarily focused on getting out of debt and managing money, Ramsey's book also touches on the principles of wealth creation through saving, budgeting, and investing. Ramsey provides a straightforward, step-by-step guide to financial fitness, focusing on debt reduction, saving, and investing.
The Psychology of Money by Morgan Housel - This book isn't just about numbers but about the behaviour around money, offering insights into why some succeed financially while others don't.
Bonus: Think and Grow Rich by Napoleon Hill - Although more of a heavy read, it delves into the mindset of wealth creation, focusing on desire, faith, and persistence. It has many insightful ideas that have stood the test of time.
- The Stock Market: Your (Long-Term) Financial Friend
Index Funds: Think of these as your investment sidekicks. They're not flashy, but they're reliable. By investing in an index fund like the S&P 500, you're essentially betting on the big players in the market. Historically, they've grown over time. Set it and forget it? More or less.
Growth Stocks: If you're feeling a bit adventurous, pick stocks with high growth potential. Think tech, renewable energy, or whatever's the next big thing. Just remember, with high reward comes high risk.
- Real Estate: Bricks and Mortar - The Kiwi Way
Rental Properties: If you can finance it, buying a rental property can be very beneficial. Rent covers your mortgage, and over time, property values might skyrocket or more likely, continue to increase in value more moderately over the long term.
But there’s much more to this story. Buying a rental property (especially with a small deposit) can give you what’s known as ‘leverage When you buy a house with a small deposit (like 10%), and you're using borrowed money (the remaining 90%) to purchase the house, if the house appreciates by 10%, you're gaining that percentage on the total value of the house, not just on your deposit. This is leverage. For example, if you buy a $100,000 house with a $10,000 deposit, and it appreciates by 10%, it's now worth $110,000. Your equity (the value you own outright) has increased from $10,000 to $20,000 (assuming no other factors). Your initial investment has effectively doubled in value.
There are other benefits (and pitfalls). We'll look at these in more depth in a future article. Stay tuned!
- Start Your Own Gig
With a small amount of money, you could start a small business. Maybe an online store, a service, or something you're passionate about. The key? Keep costs low and find a niche where you can stand out.
- Crypto and Blockchain: The Wild West
Cryptocurrency is like the Wild West of finance. Bitcoin, Ethereum, or even newer tokens could skyrocket in value. But remember, what goes up can come down faster than you can say "blockchain."
Overall - The Investment Mantra:
- Diversify: Don't put all your eggs in one basket. Spread your investments across different types to spread risk.
- Patience: Rome wasn't built in a day, and neither is wealth. Most of these strategies need time to cook.
- Stay Informed: Keep learning. The world of finance changes, and staying updated can help you adjust your strategies.
- Risk vs. Reward: Know what you can stomach. Some investments are rollercoasters; others are more like a gentle incline.
Turning $10,000 into $100,000 might sound like a fantasy, but with these strategies, a bit of luck, and a lot of patience, it's more like a well-planned adventure! Keep it cool, keep it informed, and who knows? You might just make it to that financial mountaintop.
