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21 Rich Mastery Tips

I’m about to begin a series of tips, 21 in total that have been gleaned from some of the greatest minds in the investment world. The series of tips will be published over the next 21 days so either bookmark us or join the RSS feed.

Tip One:

Aim

“How many millionaires do you know who have become wealthy by investing in savings accounts?” Robert G Allen

Cash and bank deposits are low risk and fine for near term spending requirements and emergency funds but they won’t build wealth over long periods of time.

The chart below shows the value of $1 invested in various assets since 1900. Despite periodic setbacks (see the arrows) shares and other growth assets provide much higher returns over the long term than cash and bank deposits.

20140430-oi-chart-1

Source: Global Financial Data, AMP Capital

“The aim is to make money, not to be right.” Ned Davis

There is a big difference between the two. But many let their blind faith in a strongly held view (eg “the US borrows too much”, “aging populations will destroy share returns”, “global oil production will soon peak”, “the IT revolution means this time it’s different”) drive their decisions. They could be right at some point, but end up losing a lot of money in the interim.