About this episode
Simplified Explanation: When you have paid off your debt, built up your emergency fund, and have excess money collecting in your savings, money that you don’t need for a while or until retirement, then you can invest that and grow it. When you are debt free and these investments - including a paid off house – add up to $1,000,000, only then are you truly a millionaire. Those that have $1,000,000+ of assets and then have even thousands in debt, are not truly millionaires.
Real Life: There are many ways to invest. We have discussed them in an early chapter but let’s quickly go over them again. Look each of these up at debt-freemillionaire.com/search/ (7)
You are looking for high Return on Investment (ROI) and low risk. Normally, you can’t have both, so you take one or the other or find a smaller balance. Normally, while you are younger, you are okay taking higher risk and reaping higher rewards and failures, but as you get older, you want to be more secure with your retirement.
Single Stocks – Also known as shares or equity. These are partial ownership in individual companies that are traded to the public on platforms such as the New York Stock Exchange or the Dow Jones. These are some of the highest risked investments. These include stock like Ford, Apple, Facebook. These investments have slow increases, but are normally reliable, depending on the investment you choose. Medium risk, medium ROI.
Common Trend – Buy these stocks low and sell high, or hold on to them for longer as they continue to grow. Stock do have a higher risk and may close without any return or losing your investment, if the company goes under.
Privately Traded Business Ownership – Publicly traded stocks are those with a history of making money and are available to the public, while Private Stocks are higher risk to fail, because of the lack of history. Larger buy-ins are normal. If the company closes, then all investments are lost, but if the exceed, you could 20x your money. High risk, high ROI.
Common Trend – If you have full faith in the company, being the first to invest is the most lucrative, but it also riskier. Be careful which companies you invest in.
Corporate Bonds – These funds are where you are lending money to an entity, usually for one of their projects, for a certain amount of time. They guarantee you a set return when the bond matures and closes. Low risk, low ROI.
Common Trend – These are contracted investments, they guarantee you a set return - normally small, but very secure – secured so it normally does not fail or close without paying you the set amount of money. A company that issues this bond can still default, leaving you with nothing, but, unless the company closes, you’ll be paid. These have a smaller ROI.
Municipal Bonds – When a city or county wants to build a school or anything, they vote to release a bond where different entities invest while they
