I came across an interesting old article called “10 Rules to Building Wealth.” I enjoyed the article and thought it made sense, so I’m presenting a summary of the article here:
- Start early – The power of compounding interest is amazing. The earlier you start paying debt down and saving money, the better off you’ll be.
- Use your EPF – If your employer offers a EPF matching program, you’re crazy not to take them up on it. Not only are the funds compounding tax-free, the matching program brings your returns higher than any reasonable investment out there.
- Keep it Simple – If you have a full-time job outside of picking stocks, leave it to the experts and pick a proven mutual fund, or even better, simply pick a market index. .
- Don’t Try to Beat the Market – It’s almost impossible for you to beat the market, and even most professionals have yet to do it over any significant period of time, so stick to basic mutual funds or market indexes.
- Don’t Chase Trends – Your goal is to grow assets over the long-term, there is no sense in trying to time the market or chase trends.
- Make Saving Automatic – Once you’ve found the debt solution for yourself and successfully paid off your high-interest debt, make saving automatic by setting up a plan or direct debit.
- Go Heavy on Stocks – If you’re in it for the long-term (which is how you build wealth), go heavy on stocks, they’re above-average performers.
- Hold Down Fees – Avoid mutual funds or asset management programs that charge high fees.
- Ditch Credit Card Debt – Ideally, credit cards are to be used only for convenience. The high interest rates these cards charge can quickly eat into your returns or savings plans. Find your own debt solution and get out of credit card debt as soon as possible.
- Defer Taxes – Buy and hold, avoid selling assets if you don’t need to, as this creates tax liability, when you could be deferring this liability and earning interest or returns.