What is a big mistake in you
No question: 3 wealth accumulation mistakes that can cost you a fortune
Mistakes in asset accumulation are certain to happen to you sooner or later. Everyone picks the wrong stock at some point. Perhaps when you are younger you are following an approach that is not yet fully developed or that promises the best return. Unfortunately, many of these things are part of being an investor.
However, there are mistakes in wealth accumulation that should be avoided whenever possible. Especially if you want to achieve a significant amount over the long term. Here are three really big mistakes that can cost you a fortune. So it is definitely better to bypass it extensively.Mistake in wealth accumulation: the renunciation of returns
A major mistake when building wealth is foregoing returns. Anyone who thinks that simply saving will help you set aside a large amount of money should perhaps do the math again. Even with high savings rates of 1,000 euros a month, for example, not even half a million euros is possible over 40 years. Of course, 480,000 euros is also a lot of money. But it could have been a lot more.
Those who act with a return and endure the risk of short-term fluctuations or occasional bad investments and only a return of 6% p. a. comes in per year, which could reach € 1,000 per month, however, over the same period of time. By the way: That corresponds to a return that is below the long-term market average.
However, there is another reason why foregoing returns is a gigantic mistake in wealth accumulation. Consistent inflation and negative interest rates drain the value of your money. It is therefore clever to not only protect yourself, but also to focus on long-term growth.The procrastination
Another big mistake when building wealth is procrastinating. We all know it: we prefer to tackle unpleasant things later. The old-age provision and financial matters are often a part of it. Unfortunately, mind you, because procrastinating every year could be expensive.
Let's stick with our calculation example mentioned at the beginning: If you invest € 1,000 per month for 39 years instead of 40 years and receive a 6% return on your capital, you end up with around € 1.797 million. No question about it: that is also a lot of money. However, procrastinating would have cost you over 100,000 euros. This is even worse if, in the end, your assets should not be enough for the pension gap or retirement.
Time is therefore an important factor, not to use it, a gigantic mistake in wealth accumulation. Foolish investors therefore know how to use this guarantee of success for themselves.Failure in wealth accumulation: misunderstanding
Finally, I also believe that a mistake in wealth accumulation is a wrong focus. Many investors think in terms of money, which is why they doubt it when stock prices correct. Of course, we measure assets in currencies such as euros or US dollars. However, you can also change your focus and think in terms of assets.
Perhaps an example: If you are looking for passive income, you could shift your focus to the earning power of your portfolio. In other words, how much dividend you get, how much shares you need for your dividend. That could perhaps blur or soften the money focus a bit.
Anyone who thinks so constructively and productively also sees that corrections and crashes are clear opportunities. Namely, buying new ones cheaply and collecting more assets. That is certainly not a mistake when building up wealth.
The article No Question: 3 Wealth Accumulation Mistakes That Can Cost You A Fortune first appeared on The Motley Fool.
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