The first rule of sound investing is to minimize taxes. If you can hold a stock for more than a year, you’ll likely pay less tax on your eventual long-term capital gain (LTCG) (when you sell) than your short-term capital gains (STCG) (when you sell) if you sell now. Why? Because the rate of STCG rates are higher than the rate for LTCG because capital gains are taxed at 20% for the most part (there are exceptions). So you get a 20% discount on the LTCG rate.
Let’s say you buy stock XYZ today and sell it next year when it’s gone up 20%. If you can hold it for more than a year, you pay 0% on your short-term gains (they’re taxed at your regular income tax rate), 15% on your medium-term gain (if you held it for more than a year but less than 18 months) and almost 0% on your long-term gain (if you held it for more than 18 months). Every little bit helps when you’re talking about millions.
Keep Investment Costs Low
One major tip from top millionaires investors is to take control of investing costs so they do not increase total investment costs. Millionaires know that every 1% of management costs, or every 1% of transaction costs can have a noticeable effect on the ultimate asset value in a long term investment. Therefore, it is important to take control of the financial management costs before they get too high.
Pay Close Attention to all Ventures
That Generate Income Earning potential is the first thing people weigh when trying to generate income. We want to know what we’ll have to do and how much we’ll have to do it.
Today, we’re going to share 5 Wealth Creation Actions Millionaires use on a consistent basis. Are you ready?
Dreams Don’t Work Unless you Do A lot of people say they want to be millionaires but lament that “they could never do that!” The unfortunate part is that they don’t do what millionaires do. If they did, they’d have the ability to do whatever they wanted.
Being a millionaire isn’t something that is given to you. It’s something you earn.
You earn it by taking action. You work hard, do the things others won’t do, and put in the effort to secure your future. Of course, it doesn’t happen overnight, but it does happen.
You can be the millionaire next door, and you may not even know it.
Take Calculated Risks
Millionaires do not see taking calculated risks as a gamble. They do not gamble; they invest. They may not know how things will turn out in the end, but they know that they took the necessary steps to get there.
Find your true passion
You have heard it before: “Follow your passion.” But what does that mean? You may find your passion by taking a few (or more than a few) risks.
For example, if you are passionate about traveling, you may want to take a trip without planning it. By booking a flight and staying in a hotel on a whim, you may find your passion for travel lying in a travel guide book. You may have even met someone on your way there who may now be your best friend.
So, don’t be afraid to have a bit of excitement in your life. Mobile phones, computers and cameras are great things to make sure you don’t have to travel 100 years ago. Ask your friends if they know of any must-see places that are in your price range. Use Google to search what is new and exciting in your location.
We are so focused on making money that we forget to have fun along the way. Having fun does not lead you to making more money than not having fun.
Buy Appreciating Assets
Everyone wants to make money in the stock market, but only a few realize that money is only made when you are buying stocks. The goal of investors is to buy something that is worth more in the future. Buy high and sell higher.
If an investor buys stocks that never appreciate much, he will not make money. Buying stocks that appreciate is a good strategy because it allows you to:
- sell with a profit
- sell with minimal loss
- delay having to pay capital gains taxes
Early on, the profits from appreciating assets will be small. Because of the potential to make money on stocks that appreciate, investors can compound their profits and make a lot of money over time.
Top Investing Traits of Millionaires
Successful Millionaires invest and manage their money more than the rest of the population and they also have a number of habits that you can learn and adopt into your investing style so that you can kill your debt and grow money faster.
Consistency is Key
Millionaires understand that being consistent in their investment behavior is one of the most important elements of any successful investor. Fifty-one percent of all millionaires said they make multiple investments in a year, and this makes them much more apt to buy into a company at the right time.
Develop Your Wealth Management Plan
48% of millionaires have wealth management plans in place even though 36% have million dollar or more investments. This kind of detailed wealth management plan is not something that is used by a normal investor. It should, however, be used by everyone because it helps guide your investment goals.
Creating a Team
37% of millionaires said that having a team of financial planners, accountants, and lawyers is an important element of their wealth. What this means for you is that you should be considering the overall future of your money and not just the immediate financial benefits. Having someone working with you and for you as you move forward with your investments can be one of the most important elements of your investment.