I have only been investing for a short amount of time compared to others. I started investing in October 2013 in index funds. I was a graduate with little insight into financial planning. I spent a lot initially without giving much thought to what I should do with the extra cash sitting in my bank account. Over time my view of surplus money has changed.
Over the last 3-4 years I have learned a lot about the slow and gradual process of how wealthy people I know grew their wealth. There are a lot of stories out there about people becoming wealthy quickly. These stories usually try to sell an idea which may be enticing at first but over time one realizes that easy money is hard to come by. Statistically speaking, one would be better off leaving the get rich schemes from their financial strategies and focus on real wealth generation. From the wealthy people that I know and the strategies they employ, the real way for an average person to generate large amounts of wealth in one lifetime is to live below his or her means and continuously invest the surplus into assets that hold or grow in value. Additionally, most of the wealthy people I know receive their starting wealth from their career. And then over time that wealth creates more wealth on its own without requiring the career as a base. Finding the right vocation that pays the right value is very important in getting the right start.
Living below your means does not entail being cheap. You only live once and it's just not worth saving a nickel or two while compromising your health, living condition, or the people around you. Wealthy people I know do not skimp on what is important. They take care of their family and friends. Even if something is expensive, the purchase will be done given that the purchased item or service can provide good value. They do not save the nickel and dimes for what is important to them. Living below one's means does not mean one becomes a miser. Money needs to be spent in society for one to survive but frivolities such as a new sports car or the newest television or fancy clothes can be better spent elsewhere.
In all honestly wealth building is boring. It is unexciting. Balance sheets and financial reports and tax filing is just not most people's cup of tea. People I talk to do not want to hear about it. There may be a reason "smart" people in the technical or academic sense are not all rich. Making money or getting rich is just not as exciting as curing cancer or flying to the moon. Receiving high grades or knowing everything does not mean one will be successful. In the end, money is blind. It cares not if you are smart, gifted, talented, or where you came from.
Having a high income does not mean one is wealthy. Having a high net worth to income ratio is what makes one wealthy. Having assets that generate more income than one's main job or living expenses makes one wealthy. Real wealth building takes decades. Not months or years. Telling someone that they can be wealthy after several decades is just not sexy. They would rather appreciate the short term pleasures of buying material goods and enjoying the moment. Enjoying the results of one's investments will likely not be immediately "feel-able". The move towards wealth is so slow and gradual one's brain becomes accustomed to one's increasing net worth month after month without much thought. The numbers crawls up so slowly that there is no euphoria or appreciation for "the moment".
Compared to what we see on TV, my job is not very exciting. I wake up every morning, go to the office, sit on my desk, perform my tasks, then go home. There are no luxurious such as free gourmet lunches, or luxury buses driving me home, or free massages or fun travels or big sales deals being made. It's just a regular cubicle desk job that simply generates a decent income. Every 2 weeks I receive a check and that gets deposited. When I deposit my check from my employer, I put a few Benjies into my checkings account for living costs. Then I put the majority of the rest in my investing accounts. Everything is on auto pilot and frankly speaking there isn't much "hoorah" going on. In fact it is much less glorious than I thought. However, every year I see my passive income increasing and increasing. My net worth may or may not increase depending on the economy, but my income continues to increase. Every month, I receive ever increasing dividend checks and my broker automatically deposits them into additional shares.
The only real way to notice I found is to look back at my old blog posts and put myself in my "old" shoes and see how much of a difference the years have been. Over time I hope I can look back and appreciate my younger self for planning ahead when most of America is too pre-occupied with the present moment.
-YD
