Working hard to earn a steady income is great, and indeed, virtually no one in the business world would be where they are without an enormous dedication to their cause. However, contrary to what most people think, this type of daily grind can only carry you so far toward the goal of growing real wealth.
The bottom line is this: making money is great, but making your money work for you is even better. Excess funds from your business’s profit are wasted if they end up just stashed away in a savings account with a practically non-existent interest rate. Instead of doing the equivalent of rolling up dollar bills in an old coffee canister, look to investments and what they can do for you. Here are three reasons why investments continue to be one of the best choices for making real and valuable wealth.
1. You’ve got plenty of choices. Real estate, stocks, bonds, and investment funds — need we say more? Investing is actually a rather broad term for the vast array of choices that you have at your fingertips. Whether you want to own rental property and collect monthly payments or put your money into a bond for a specified term, there certainly is not a lack of opportunities.
2. Diversifying your portfolio is easy. Remember all those choices you have? Admittedly, there are certain risks involved with investing your money, but these risks can be mitigated by utilizing the various options that you have. Avoid falling into the trap of investing your money into only one area. You can hold a couple of real estate properties, own stock in several companies and pool funds with other investors to make a solid investment fund. The more you diversify your investments, the more protected you’ll generally be.
3. Long-term capital gains are taxed at a lower rate. Buying and selling investments is certainly one aspect of creating a solid investment portfolio, but the period of time for which an investment is held before being sold affects the rate at which it is taxed. For most investors, this means it is generally the best idea to hold onto investments for at least a period of one year, making them long-term capital gains when sold, and qualifying them for a much lower tax rate than if they had been sold after less than a year.
Still not convinced? Consider your role models in the online business world and, if possible, reach out to some of those who you consider most successful at accumulating wealth. They will most likely reaffirm to you that investments continue to be one of the prevailing and most effective wealth growing techniques