How can you make sure that your wealth can sustain you throughout the years when income becomes less and less of an option?
Read on for details.
Stocks are said to be the best way to generate long term wealth. How can this be so? Aren't stocks for the savvy businessmen? Isn't there a chance that stock could lose its value overnight? Isn't that a bit too risky?
Yes, stocks can be risky. If you do not have a good understanding of securities and the stock market.
There are many kinds of stocks. High risk stocks can make or break investors - some become exceedingly wealthy overnight, and some exceedingly broke. At an advanced age this sort of investing is out of the question.
However, there are what are called low-risk stocks. These come in the form of blue-chip stocks (companies that always perform well in the markets), bonds, and other low risk investments. The secret here is to invest in stocks that have a history of performing well year after year. These stocks may not bring back the biggest profits, but they perform well enough to generate a steady source of wealth.
What is an annuity?
By strict definition, the word "annuity" means "an amount payable annually." This refers to a contract made by an insurance company that allows you to save funds for retirement with the tax deferred. You can then receive income for life or for a set period of time.
Annuities are a great way to create long-term assured pay-outs. They are very much like insurance but are a definitely well structured means of creating wealth over a long period of time. This kind of investment is recommended for those who are contemplating retirement.
The best way to generate wealth is to save it.
If a person were to earn a million dollars per year, and spend a million dollars per year also, would he be considered a millionaire? Of course, not. He's probably closer to bankruptcy than wealth!
Living within your means allows you to save more for the future. This allows you to enjoy your hard earned money when you most need it. Also, saving earn interest. There have been cases when people have been able to live of the interest of their savings. If this is your goal, you should plan for such, and save to accomplish it.
Plan your expenditures
Planning your expenditures does not apply only to today's needs. If you plan to generate long-term wealth try planning for your expenses even in the future. This will help you keep you books straight so that in the future, you will not be bound by 'sudden' expense needs since you will have prepared for them in advance.
You should also plan create contingency plans in the event that there be a sudden emergency that befalls you. This will shield your savings from taking a big hit when an occasion arises.
Know your limits
It would do well if you could know your limits. Man has a set number of years on earth and he can only do so much. Don't get caught up in the moment and think that you can sustain an income edge today indefinitely. If you know your limits, you can then allocate your time, finance, and effort in way that will optimize what resources you have.
Take out an insurance policy. This is probably the most important and most popular means to generating long-term wealth. Choose an insurance company that has been proven to deliver its promises. The financial security an insurance company delivers - be it through pensions, life insurance, and others - will do well to make your retirement comfortable.
Start a Business and Keep Busy
Small businesses or other income generating means can continue to generate wealth for you even until the next generation. Some businesses were started by people in their advanced age. Take Col. Harlan Sanders for example. He started the business that would be KFC when he was at retiring age. And it still makes money until today.
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