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- If you want to build wealth, plan for the long-term and be patient.
- That’s according to Katie Brewer, a financial planner who says that when it comes to money, too many people focus only on earning it and spending it.
- Patience is a cornerstone of billionaire Warren Buffett‘s investment strategy.
At the risk of sounding poetically cliche: Rome wasn’t built in a day, and the same goes for your net worth.
“This seems obvious, but there are plenty of people who only focus on two things when it comes to money: making it and spending it,” Katie Brewer, a CFP and the founder of financial-planning firm Your Richest Life, wrote in a blog post. “But that is a short-term view of money that does not lead to wealth.”
Focusing on increasing your income is invaluable, to be sure, but those earnings won’t lead to lasting wealth without thoughtful planning and the patience to see it through.
Look no further than Warren Buffett. The billionaire CEO of Berkshire Hathaway considers patience a cornerstone of his winning investment strategy. Buffett repeatedly advises fellow investors to remain steady even when markets go haywire.
“Investors who avoid high and unnecessary costs and simply sit for an extended period with a collection of large, conservatively-financed American businesses will almost certainly do well,” he wrote in his 2016 letter to shareholders.
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There’s a reason advice like Buffett’s is ubiquitous, Brewer said: It works. “Save a portion of every dollar you earn. Don’t spend more than you have. Make investments that will earn you money over time. The key ingredient in each of those steps is patience,” she wrote.
Financial planners suggest making saving easier by automating contributions to a high-yield savings or retirement account. Saving off the top forces consistency and nearly ensures your wealth will keep growing.
When it comes to investing, experts recommend low-cost index funds, a Buffett favourite. Index funds are a type of passive investment that exposes investors to a broad selection of stocks in order to diversify and ultimately minimise risk. They’re low-cost and regularly outperform actively managed funds – as long as you’re patient.
As Buffett put it, “There is nothing wrong with getting rich slowly.”
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- Read more expert tips for building wealth:
- We asked financial planners their favourite way to build wealth, and they all said the same thing
- People who save more than 3 times as much as the rest of us are making 4 smart choices with their money
- 9 red flags you’re not building wealth, and how to fix it
- 8 ways to make your money work for you
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