7 KEY LESSONS FROM THE SIMPLE PATH TO WEALTH BOOK

The Simple Path to Wealth has been widely praised for its hands-on and practical approach to wealth-building. Though there are many valuable lessons on financial freedom throughout the book, we have selected seven key lessons that are simple but effective in building and sustaining wealth. These lessons are very effective when tackled holistically in accordance with the GuardianWealth wealth management app.
 

1. CHANGE YOUR MONEY MINDSET

The first step to wealth-building has to do with your mindset. How do you view money? Do you see it as a means to satisfy your fleeting desires, or another means of making more money? Unfortunately, many people hold the former view – they see money as a means to fulfill all their desires. Therefore, immediately their desires are satisfy, they believe money has finished its role. Thus, many people live in a vicious cycle of “earning” and “spending” without thinking about how their money can earn more money, which can lead to poverty. Money has an opportunity cost element which means that you can miss out on great opportunities to build wealth if you don’t use money wisely. Money is a scarce resource, therefore, one must be frugal with it or else you’ll remain in the cycle of poverty. To break from the cycle of poverty and begin building wealth, you need to see money as a means of making more money.
 

2. LIVE BELOW YOUR MEANS

So many people are in neck-deep debt because they live beyond their means. They buy items that they can’t immediately afford – items that they don’t even need. Some buy items on credit just because they want to make a fashion statement. Their desire is not necessarily to fulfill a dire need, but rather to show off or fit into a certain societal class. This unhealthy desire drives them into living beyond their means, thereby accumulating huge debts. The second step to building wealth is to live below your means. It is not enough to change your mindset about money, you need to start saving and investing. However, to achieve that, you need to spend less than what you earn. This takes a lot of discipline and patience, that is why you need a budget. A budget guides you on how to cut unnecessary costs and live within your means.
 

3. DEBT IS AN UNACCEPTABLE BURDEN

There is no way you can build wealth if you have debts to pay. That is why you need to avoid debts like the plague. In today’s society, debt has been advertised as a normal venture. It works because marketers and companies make trillions of money from debts owed to them. It is estimated that Americans carry a total debt of $14.2 trillion with each carrying an average personal debt of over $92,000. Nobody seems to care that debts are a one-way ticket to financial distress. The disadvantages of debt cannot be overstated. First, the more you owe the less you have. You may make millions but if you owe millions or even billions, you will live your life under financial constraints. Also, racking up debts racks up your stress level. This leads to less productivity both in your personal life and at work. Debts can lead to an emotional and psychological breakdown if care is not taken. This is why you need to pay off debts as quickly as possible. The book recommends that if your interest rate is below 3% then you can gradually pay it off in installments. If it is between 3-5%, you can choose between paying it off in installments or at once, but if it’s above 5%, then pay it off at once. That is the way to go if you want to be financially free.
 

4. DON’T PUT ALL YOUR EGGS IN ONE PLACE

This advice is fairly simple and straightforward and it makes a lot of sense. Putting all your money in one investment vehicle is the riskiest investment path you can take for obvious reasons. If the investment vehicle collapses you lose everything, and may even lose your sanity. It is like putting all your eggs in one basket, hoping that they’ll hatch and give you beautiful healthy chicks. Then, out of the blue, the basket falls and you lose all your eggs That is why you need to divide your eggs and keep each group in a different basket. This way, should your one basket fall, the other baskets will still have their eggs intact. This is what is known in investment circles as a fully diversify portfolio. You put your money in different investment vehicles. If you don’t know how to do that, don’t worry. Our GuardianWealth wealth management app has been made for you. We have a grounded approach to investing which targets the long-term. Also build optimized diversified portfolios using the Nobel prize-winning called Modern Portfolio Theory to maximize your returns for a given level of risk. We achieve this by forecasting the market through the use of the famous Monte Carlo simulation which depends on historical data to predict different possible portfolio outcomes. Then we use the Dollar-cost averaging investment strategy to lower your cost basis. This is done by investing a consistent amount of money in an investment plan at regular periodic intervals. You reduce your average cost per share by buying more shares when the prices are low and sell when the prices are high – and that is how you build wealth.
 

5. DON’T PICK STOCKS, INSTEAD INVEST IN LOW-COST INDEX FUNDS

As discussed earlier, it is prudent to diversify your portfolio. However, don’t pick stocks, to begin with. The general advice is to start with low-cost index funds to build wealth. This is because index funds come with low risks and steady growth. The chances of losing money in index funds are low compared to non-index funds. So, what is an index fund? To put it simply, it is a type of mutual fund or exchange-traded fund that tracks a specific financial market index. Index funds can be a group of stocks or mutual funds that are programmed to track the performance of a specific market index. The fees associated with managing index funds are cheaper than the professionally managed funds. GuardianWealth uses low-cost index funds to build wealth because they are less volatile and their value increases over time as well. They are a very powerful tool in wealth-building. So, if you want to build wealth then try our app today.
 

6. START EARLY AND THINK LONG-TERM

Since it takes some time to build wealth, the best time to start is now. Don’t sit on the fence, take the necessary steps today. Though short-term investments may have huge returns, they are highly risky. So the general idea is to target long-term investments – where the growth and income are steady. One of the best ways to do this is through the power of compounding. Compound Interest is the interest you earn after reinvesting the interest you’ve accumulated over your initial amount/investment. To explain it simply, for each investment you make you earn an amount as your interest. The temptation will be to immediately spend the interest leaving the initial amount/investment. However, if you resist that temptation and reinvest your earned interest plus your initial amount, it will yield more money in the long run. Doing this on a consistent basis is known as compounding. Compounding increases your earnings exponentially, thereby making you rich in the long term. However, you’ll need to exhibit a high level of discipline if you want to harness the power of compounding.
 

7. INVEST IN YOURSELF

This step is often overlooked and undervalued, but it’s a key factor if you want to increase your earning potential. Investing in yourself by acquiring knowledge helps you when you are negotiating your salary as a new employee or asking for a pay rise. Without excellent academic credentials, negotiating for a great salary will be an uphill task. According to available statistics, the salaries of people with the highest academic qualifications are triple that of those with the lowest ones. So spend some time and money on improving yourself by investing in your education. Learn new skills and ways by which you can be better at what you do. If your work is flexible and not so demanding, you may learn other skills which may be similar to or different from what you currently do. You can then look for jobs that demand the new set of skills you’ve just acquired. Doing so helps you to widen your earning potential. For example, let’s say you are a copywriter, you can take lessons in editing and proofreading to expand your horizon. The good part is that some of these lessons come at no cost. All you have to do is make the time and the effort to go through the lessons and you are good to go. You can also acquire valuable knowledge and skills on how to achieve financial freedom by enrolling in GuardianWealth’s financial wellness program. This program will give you the necessary education that you need to start building your wealth and break free from financial constraints. Always remember to invest in yourself.

These are the seven simple steps to wealth-building that you can implement to gain your financial freedom. However, if you need help, GuardianWealth’s approach to wealth-building is made for you. It inculcates all the lessons shared above and it uses an easy and practical approach to help you build your wealth. Why don’t you try it today?