There’s no shortage of wealth management advice out there. Sometimes though, the simplest advice can be the most effective. With that in mind, I want to share three simple quotes I feel are extremely powerful when it comes to wealth creation. Could they help you achieve financial freedom?
“Never depend on single income. Make investment to create a second source” – Warren Buffett
Let’s start with this gem from Warren Buffett. It’s not an eloquent quote by any means, but in terms of wealth management advice, it’s spot on. After all, the average millionaire has seven different sources of income, apparently.
These days, building up multiple income streams is easier than ever. And one easy way of creating extra income is investing in dividend stocks. These are stocks that pay out cash payments to shareholders on a regular basis.
Take a look at the FTSE 100 today and you’ll find around a third of the stocks in the index offer yields of 5%, or higher. For example, Shell (LON:RDSa) shares currently yield 5.8% while Lloyds yields 5.4%. With these kinds of yields on offer, it really is easy to start earning a second income from stocks. And this could make a big difference to your wealth over time.
“If other people are putting in 40-hour work weeks and you’re putting in 100-hour work weeks, then even if you’re doing the same thing… you will achieve in four months what it takes them a year to achieve” – Elon Musk
What I love about this quote is its simplicity. Elon Musk is widely regarded as one of the most influential entrepreneurs in the world today. Having co-founded PayPal, and now heading up Tesla (NASDAQ:TSLA) and SpaceX, the guy is clearly a genius. Yet here, Musk is simply saying when it comes to achieving your goals, there’s no substitute for hard work.
I’ll admit working 100 hours a week is probably a little excessive. However, if you’re willing to show a little initiative and take on some extra work outside your 9-5 job, it could make a big difference to your wealth, over time.
For example, let’s say you pick up some freelance work that brings in an extra £3,000 per year on top of your regular salary. Invested properly, this extra cash could boost your savings substantially and potentially allow you to retire years earlier than you would have on your normal pay.
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case” – Robert G Allen
Finally, this is a fantastic wealth quote from US financial expert and best-selling author Robert Allen. And it’s a point that many people seem to miss, as millions of people across the UK appear to have the bulk of their money wasting away in Cash ISA accounts. Realistically, it’s very hard to become wealthy if your money is sitting in a cash savings account earning 1% interest per year because your money won’t even outgrow inflation.
The bottom line is if you want to generate wealth, you need to get your money working for you. This means investing it properly and constructing a diversified portfolio of assets capable of generating a healthy return. Do this, and you’ll give yourself a much better chance of retiring early… and wealthy.
Edward Sheldon owns shares in Royal Dutch Shell and Lloyds Banking Group (LON:LLOY). The Motley Fool UK has recommended Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2019