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This money advice could help make you truly rich

The best advice about money I ever heard is “save some, spend some, and give some away.”

We can all aim to become wealthy, but to live a truly rich life we need to keep our thinking on money in balance. Being rich in life has a three-dimensional meaning, in my view, and it’s not all about accumulating cash.

Everyone needs to spend, to get the necessities, but also the extras that reflect your interests in life. Tips, presents, and charitable donations that you give can also help you feel good, which adds to the quality of a balanced life. Regular investing in the stock market can help you build a rainy-day fund or second retirement income, and the knowledge that you are doing that can also help you feel contented as you go through your life. 

Investing for rainy days and retirement

I reckon it’s a good idea to regularly save some of your income, and even better to invest what you set aside. I’d go for shares and share-backed investments such as managed and passive funds, for example.

But don’t invest so much that you end up living a life of austerity. I reckon it’s key to live below your means so that you can save and invest, but don’t throw everything at saving and investing. Investing for a brighter future loses its attraction if you end up being the wealthiest person in the graveyard!

My preference is to make regular monthly investments into the shares of carefully chosen individual companies alongside managed and passive funds. I like the stock market because, generally, shares have outperformed most other major class of assets such as bonds and cash savings. I think there’s a good chance shares will do well in the decades ahead as well.

One thing you can do to get the most from your investments is to take full advantage of the tax benefits offered by pension schemes and Stocks and Shares ISAs. You can go for a workplace pension if your employer offers one, which will likely receive a boost from extra contributions your employer will make over and above your own.

If you don’t have one of those, a personal pension that invests in managed funds for you will still give you the tax advantages, as will a Self-Invested Personal Pension (SIPP), which is my choice.

Getting great results from investing

I like SIPPs and Self-Select Stocks and Shares ISAs because I have full control over what investments go into them. These days, I mainly invest in the shares of individual companies. But it’s only worth doing that if you are prepared to learn all about investing strategy and to put a lot of time into monitoring and researching your investments.

If you’re not prepared to that, you can still achieve great investment results over time by putting money into managed funds and passive investments such as tracker funds. If you are keen to get started with investing, you’ve come to the right place here at the Motley Fool. Stay tuned!

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Kevin Godbold has no position in any 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.