How Millennials Can Get Rich Slowly

It seems that in the digital age millennials are being trapped by a constant barrage of get rich quick schemes.

The most successful investors are often the ones who go to where they are slowly.

Take Warren Buffet, for example, he has spent his entire life gaining the net worth he has today.

When he started investing as a teenager, he understood that it would take him time to amass a large amount of wealth.

The strategy he implemented was called value investing – buying undervalued stocks and sitting on them for years, even decades before selling.

Some investors who critic his long-term approach ought to take a look at the $3 billion in his bank account.

The man is obviously doing something right.

Below I will go through 2 ways that millennials can get rich slowly, a little hint, patience is required.

 

Passive Income

Passive income is the concept of working a substantial amount upfront and reaping the rewards after the work is completed for a long period of time.

This is in contrast to the active income methodology we are all so familiar with – work money, work money.

Passive income can provide the investor with cash flow for their entire life if they decide to engage actively with the strategy.

The aspect of Passive Income we will be focusing on today is share dividends.

When some publicly listed companies make a profit, they will distribute a portion amongst their shareholders as a thank you and incentive for investing – this is called a dividend.

The reason why this is considered a passive income strategy is that the investor does all the research and work at the beginning.

By researching and evaluating the stock before purchasing the investor has completed the upfront work and will continuously reap the benefits into the future without any additional work.

When looking for a stock that will provide great dividends it is important to consider the dividend yield, the percentage of the price of the dividend in relation to the cost of the stock.

High dividends on low-value stocks are what you should be aiming for, this will allow you to purchase a great number at a small price but receive sizeable dividends.

This aspect of passive income is not going to make you rich quickly, the dividends will provide a cash injection and motivation to continue the investment.

The riches come from selling the stock in the future for hopefully a much higher price than you bought it for.

 

Invest In Small Businesses

Do you have a friend or family member that is starting a business with promising potential?

If so, ask to buy shares within the company.

If the business becomes successful you will reap the rewards from buying in at the ground floor.

A bonus is you will not be charged brokerage fees as the transaction can take place directly between the investor and the business.

An example of this can be seen with the beginnings of Apple Inc.

Ronald Wayne invested in Apple at the beginning of the company’s creation, he invested no more than $1000 into the business.

He saw the potential and acted upon it; his initial investment would now be worth over $80 billion!

This goes a long way to prove the success of this get rich slowly strategy.

You might lose money, you might not, this strategy is all about keeping your eyes out for businesses with a large amount of potential to flourish into the future.

Unlike passive income, this strategy will not provide any dividends in the meantime as the company’s invested in will most likely not be able to afford to pay them to you at the beginning.

If you don’t know someone starting a business, which is most likely, it may be worth scouting the business name registration page for your state.

Don’t expect a business owner to let you invest straight off the bat though, it is important to build rapport between yourself and foster a strong professional relationship.

 

The bottom line

Passive income investing is relatively low risk, you will most likely return positive gains over the long term, however unstable markets can result in major price dives and the stopping of dividends – rendering the strategy useless.

In contrast, investing in new businesses is extremely risky and can result in significant losses, with saying that, it can also result in astronomical gains if you invest in the correct company.

With all investments, it is important to do your research and remember past performance is not indicative of future growth.

Gavin McMaster has a Masters in Applied Finance and Investment. He specializes in income trading using options, is very conservative in his style and believes patience in waiting for the best setups is the key to successful trading. Follow him at www.optionstradingiq.com