PRINCIPLE OF GETTING RICH

PRINCIPLES OF GETTING RICH
If only I had a dollar for every time I've been asked what the secret to getting rich is. The truth is, there are no secrets to getting rich. But there are principles everyone should follow if they want to live comfortably. If you follow these tips, I can't guarantee you'll get rich. But you'll be a lot better off than if you don't follow them.1. Get financial advice - but don't always take itAn initial consultation with a financial planner is usually free and even if you don't sign up for a permanent relationship with the planner, you can get quite a lot of information relevant to your own finances at this initial meeting. Many people do choose to build an ongoing relationship with an adviser. But don't think you always have to take their advice. Make sure you understand the adviser's relationship with companies that manufacture investment products, because these relationships could bias their recommendations.2. Educate yourselfLearn how to read a balance sheet so you can tell for yourself whether a company is performing well or not. Buy books on finance and investing, watch finance shows on the television and use the ‘net to develop your understanding of finance. This will give you the right skills to weigh up different investment options, as well a good understanding of the risk/reward relationship.3. Buy low, sell highIf you're making an investment, don't make the mistake of buying the asset at the top of the market cycle. Try to make investments in blue chip assets that, for whatever the reason, are not fully valued when you buy them. Then sell the asset when the market for the asset is at or near its peak.4. Don't put all your eggs in one basketThe trade term for this is diversification. Put your money in a number of assets so that, in the event one doesn't perform strongly, the others should still generate a decent return.5. Live within your meansThis means spend less than you earn. The only way to do this is to keep track of your expenses, develop a budget and try to stick to it.6. SaveYou need to save a portion of your income if you want to develop a sound financial footing, at least 10 percent. Your savings should be invested in quality investments that can deliver a good return over time.7. Look for bargainsEspecially at the moment, there are lots of bargains in all sorts of product categories. So, do your homework, especially when you're buying big ticket items like white goods, to get the best price possible.8. Manage your debts properlyMost people will need to get into substantial debt during their lives, usually when they buy their own home. This sort of debt is worthwhile because you'll have something to show for it - your own home - when you pay it off. The sort of debt you don't want to incur is debt you have nothing to show for. So don't get into debt just to buy junk on your credit cards. Instead, save money and pay cash for disposable items that won't add to your net worth over time.9. Be very careful lending moneyOne of the easiest ways to lose money is to lend it to friends and family. Often you won't get it back, which will mean you not only lose the money, but the relationship as well. If you're asked to lend someone money, politely decline, explaining your relationship with the person is too important to risk by lending them money.10. You can't get rich quickIf you want to be financially secure, you need to conserve your money, invest wisely and wait. Over time, your net worth will improve, as long as you're patient and don't take too many risks.