5 Random Golden Rules to Become Rich

Everyone would like to become rich. But how do we get there ? Does equity investing make you rich ? Or is it the  tortoise like slow and steady systematic investment planning route of mutual funds that gets you the riches. Golden rules to becoming rich are far and varied.

If you master some of the Golden Rules to become Rich in your lifetime, you will come out as a wise investor.

Here are some wise or Golden rules to become rich in your life time.

Contain your passion for spending

Lines should be drawn between ‘what you need’, ‘what you think you need’ and ‘what your next door neighbour says you need’.  In short, know your needs and wants. The spending beast in you is in direct contradiction with your desire to save.

Check and hold your passion for things which can make your life a little more than comfortable but those with which you can do without. When a good collectible at your neighbor’s place lulls you into spending, stay calm and collected. Ask yourself 10 times why you want to possess what you are planning to buy. More often that not, you will realize it’s a momentary desire which subsides later.

Expenses need more planning than investing does and remember money saved is money earned.

Enjoy the milk but put the cream aside

Each month when your salary hits your accounts, make sure that you keep a fair percentage aside before you spend. Don’t believe on your impulse which persuades you into thinking that you will save the surplus left after spending. There will be no surplus unless you plan on how and where to invest.

Only after a few years when you get habituated with removing this cream into a strongbox, you will realize that the power of compounding has grown your money to the point of endowing you with a dog-tag saying you are ‘rich’. This is one of the most basic but golden rule to become rich.

Golden Rules to become Rich – Take to diversified investments

This will look like a very often shouted out advice. But take to it because most of the retail investors do not.

If you put all your investments into one investment class, you are at risk if that investment class under performs.

One of the easiest ways to fend off the danger will be to invest in different categories of asset classes. You distribute your investment among equities, real estates, bonds etc. You can also diversify your portfolio by investing in value stocks, growth stocks etc.

Good performance in one section will counterbalance the unexpected performance of another and your return on investment will be assured.

Don’t invest your lot in high performers alone

While planning your investing strategy, you must not focus only on those investments that have given say, 70 percent returns in the previous year. Such mercurial performance doesn’t guarantee the same return year on year.

So if real estate shot up through the roof last year, there is no guarantee it will again this year. Obviously, the product sellers will try to milk you high and dry on this, but take a step away.

Same is the case with stocks – be wary of those that have given you huge returns. Rather you should focus on those stocks which have produced say, 12 percent in a row along the previous many years.

Invest wisely during financial disaster

It is likely that during trying times like financial recessions, you will be tempted to sit on cash but the million-dollar secret is that everyone makes the same mistake.

Its one of the golden rules to become rich is, recessions are probably the right time for investors to invest wisely. 

During such times the shares of most of the companies go down  and you can sweep your money into them. It’s probably the best time to by into blue chip stocks. Real estate also takes a beating and if you are looking to buy a house, this can be the right time.

Essentially, when everyone is running away from the market, you need to step back right in it in a daring way. Invest and hang tight and when the economy recovers sooner or latter, you will be laughing your way to the bank.