Hard to build wealth off current income

I was listening to the Pivot podcast and the host, Scott Galloway made the point that it is hard to build wealth off current income.

When building wealth, there is no point in doing all the heavy lifting. You work hard to earn the money, why not use capital markets to share the load? Invest in global companies who will grow in value and increase your wealth, without you having to do anything. The world’s largest companies are lead by some of the greatest business people in their world. By investing in their companies, you are benefiting from their expertise, knowledge and ability to scale their companies.

Of course, the value of their company will go up and down over time. If they launch a poor product, the value will go down or outside events may effect the share price. But by investing in solid companies, countries and properties, you will make money in the long run. 

Don’t pay for everything yourself

By using capital markets to accumulate wealth, it means that you don’t have to pay for everything out of earned income.

Say you want to save for your child’s college fees. which will cost €16,500 over 4 years. If you invested €12,230 at 6% return 10 years in advance, you will cover the cost of college. If you invested €9,625 18 years out, you will have covered the cost.

By investing for the long term, you can stand on the shoulder of giants and get capital markets to grow the money you worked hard to earn.

If you have any questions, drop me an email at steven@bluewaterfp.ie