3 things I’m doing today to retire wealthy

It’s never too early to start saving for the future. Here are three things you can do today to boost your pension savings.

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

One thing I’ve learnt about money over the past decade is that to become wealthy, you need to concentrate on the small things. Becoming wealthy isn’t something that happens overnight, and even highly-paid individuals struggle if they don’t have the right mindset.

Indeed, many high-earning individuals live from paycheck-to-paycheck because they don’t keep an eye on their money. So, with that in mind, I’m going to explain the three simple things I’m doing right now to retire wealthy.

Save before spending

When it comes to saving, one of the biggest mistakes most people make is not saving enough. To get around this problem, I save my money at the beginning of the month, and then spend what’s left over.

Tucking money away safely before you get a chance to spend it is a great way to make sure that you are saving and not overspending. It also forces you to keep a closer eye on your finances and where the money’s going. You might have less money to spend every month, but that means you’ve got more time evaluating whether or not the spending decisions you’re making are the right ones.

Invest in yourself 

The best way to build wealth over the long term is to invest your money (more on that later). I’ve lost count of the number of high-earning individuals who’ve told me they just can not be bothered to spend their time trying to get to grips with investing. This is probably one of the most costly mistakes you’ll never make if you want to retire wealthy.

Today, there are hundreds of books out there explaining the basic concepts of investing, and they don’t cost an arm and a leg. There are thousands of personal finance books available online for less than £10 each. This small capital outlay could potentially be worth hundreds of thousands of pounds in investment returns over the long term and could be the best investment you will ever make. Some of the investment books I own have paid for themselves many times over.

Invest for the future

As I noted above, investing your money is one of the best ways to grow your wealth. However, many savers ignore this route because they think it’s too complicated or too risky. 

The fact of the matter is, investing isn’t particularly risky if you’re investing for the long term. We don’t know what the stock market will do in one, two, or five years. But we can be sure that over three or four decades, the market will trading at a higher level than it is today.

For example, over the past 100 years, the UK equity market has returned around 5% per annum after inflation. This time frame includes two world wars, two severe economic depressions, and a handful of recessions.

Over the past decade, the Footsie 100, the UK’s leading blue-chip index, has produced an average annual return of around 10%. At this rate of return, you’d double your investment every 7.2 years, without taking on too much risk. You can’t ignore this kind of performance if you want to retire wealthy.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.

More on Investing Articles

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »