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10 Steps Guaranteed to Build Wealth

I didn’t have time to write a short letter, so I wrote a long one instead. - Mark Twain

In this case Capital MONEY! has taken the time to write a short letter post... at least relative to what we hope to accomplish with it.  

For many people wanting to learn about finances and how to build wealth it can be a daunting, uncomfortable, and confusing process. The world is full of misguided and predatory information and it's hard to know who to trust or what to believe. 

The goal of this post is to provide 10 simple steps that will build wealth for anyone who chooses to follow them. Regardless of their current financial situation. 

10 Steps to Wealth Creation:
  1. Commit to the fact that there is no easy and fast method to becoming wealthy. Building wealth requires time, consistency, and sacrifice. Accept this and learn to love the process. 

  2. It doesn't matter what other people have. What your coworkers, friends or people on the internet are doing is irrelevant. Your life is not better or worse because someone posted a video of themselves on a yacht.

  3. Spend less. Stop going to bars and restaurants, move to a less expensive home, buy a less expensive car, go on fewer vacations, stop buying clothes, keep your phone twice as long, buy less expensive groceries. Like with losing weight, it is easier to not eat the donut than to walk the 1.5 hours needed to burn off the calories from it. For wealth creation, it's easier to not spend the money (eat the donut) than it is to earn more money (taking the long walk). Change your perspective so that you get satisfaction and a sense of accomplishment every time you don't spend money.   

  4. Earn more. Get a raise, change jobs, get a second job, start a low-cost side gig. Try anything and everything you can to (legally) earn more money.  

  5. Save enough cash to cover all your living expenses for 9 months. Add up everything you spend in a month (housing, transportation, utilities, food, gas, etc) and multiply by 9. That is the minimum amount of cash you should have in a bank account at all times for the rest of your life. 

  6. Eliminate all debt other than your mortgage. 

  7. Open a Roth IRA (if you are under the income threshold) and invest in an ETF (Exchange Traded Fund) that tracks the total US Stock Market or total World Stock Market.

    It may seem too simple (and boring) to be true, but you don't need to invest in anything else.     Numerous studies have shown that 95%+ of investment advisors can't beat the returns of the US Stock market over a long period of time. Furthermore it has been proven that you are unable to know which 5% of investment advisors will beat the market in the coming 5 years, because those 5% beat it by luck rather than skill and virtually never beat the market for consecutive 5 year periods. So if you choose to use an investment advisor, you have a greater than 19/20 chance that you will be worse off than if you just bought shares in any of the ETFs below.
    • Examples of US Stock Market ETFs: Vanguard Total Stock Market Index Fund (VTI);  iShares Core S&P Total U.S. Stock Market ETF (ITOT); SPDR Portfolio S&P 1500 Composite Stock Market ETF (SPTM); Schwab US Broad Market ETF (SCHB)
    • Examples of Total World Stock Market ETFs: Vanguard Total World Stock Index Fund (VT); SPDR® Portfolio MSCI Global Stock Market ETF (SPGM)
    • Note - Capital MONEY! is not affiliated with any of the above companies. Capital MONEY! is not making investment recommendations for specific stocks or funds. Other ETFs exist and we hope the examples above are used as a starting point for your own individual research and investment decisions. 

  8. Contribute to your 401K and/or equivalent retirement accounts available to you. At least enough to get the full match that your employer provides. We generally recommend Roth over traditional 401k contributions, however not all 401ks offer a Roth option. Ultimately both options are good and you should feel great about contributing to either. (Recall #1 ... love the process)
  9. If/once you hit annual 401K and Roth IRA contribution limits, open a regular investing account and continue investing in the same ETFs.

  10. Don't sell your investments. Keep buying. Don't try to time the market. Don't panic. Time in the market beats timing the market. 

Please let us know if this was helpful and/or if you have any questions!

Capital MONEY!
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