Todd Baldwin – a famous self-made millionaire who had the idea of making quick money at a young age and would retire early. He was raised in a family of only his mother and witnessed her difficult livelihood. Therefore, in order not to have a future of experiencing such financial deprivation, Baldwin went to work very early.
His first paid job was selling commercial insurance. With his salary and commissions, he started investing in real estate when he was just over 20 years old.
Baldwin bought a six-bedroom house in the suburbs of Seattle, USA. He lived in one room and made money by renting out the other 5 rooms. This rental income not only helps him cover all of his mortgage payments, but also generates huge interest.
Baldwin and his wife have started their real estate investment journey since then. At the age of 25, his net worth surpasses 1 million USD (more than 23 billion VND), and most of it comes from rent.
At the age of 28, Baldwin became a millionaire and felt very comfortable not having to do a simple office job. Today, he is mainly in the real estate business and earns an additional 1 million USD for 5 transactions by 2022.
In addition to his main income from real estate, Baldwin also invests in the stock market. He chooses to invest in multiple index funds rather than individual stocks. According to information provided by Insider, he invested in the Vanguard S&P 500 fund (code VOO).
This year is the “zodiac” time to invest. Therefore, millionaire Baldwin shared 4 “easy to understand-easy” principles for new investors to help them have a stable income.
1. Invest in something you really understand
One of the top money tips Baldwin told Business Insider is to “invest in what you really understand.” For example, Baldwin has studied the real estate market very carefully and has a certain amount of knowledge. He invested in it for 7 consecutive years.
Before deciding to pour money into any portfolio, try to imagine how you would explain that investment to friends to increase persuasion. If you can’t explain why this is a smart investment or really potential, consider and research carefully before deciding to “go in”.
2. Diversify
One of the golden rules of investing is diversification. That is, investors should pour money into many different portfolios to minimize risk. If one investment performs poorly, there will still be other investments that do well.
Investors can choose to diversify into asset classes such as stocks, bonds, cash, real estate, commodities or collectibles. For example, Baldwin doesn’t just own real estate; He also invests in the stock market through index funds.
Or you can diversify right within asset classes. For example, if you are investing in stocks, you should not put all your money in one category. After all, you could lose everything if the company fails.
Instead, consider investing in mutual funds or ETFs. It’s easy to invest in hundreds or thousands of stocks or bonds at once. This is known as the “Don’t put all your eggs in one basket” strategy.
3. Don’t confuse investing with saving
Saving and investing are two very different concepts. If you want to get really rich, you shouldn’t just save your money, Baldwin stresses. You have to use money to “lay” money. For example, you can invest in multiple portfolios and get started as soon as possible. But before “spending money”, pay attention to the first two principles.
If you’ve never invested and don’t know where to start, an easy way to get started is to use a retirement account, such as a 401(k) or 403(b), if your company offers one. A 401k allows you to deduct a certain percentage of your income before you pay taxes. 403(b) also helps you invest in insurance company contracts or mutual funds. The amount deposited into these accounts will increase over time.
4. Long-term investment
“Abandon all get-rich-quick ideas and opt for long-term investing,” says Baldwin. When it comes to investing in the stock market, he says that investors should “buy and leave”. This means that once you’ve decided to “put your money in,” such as buying a mutual fund or ETF, hold it for a long time despite stock market changes. “Don’t just trade short-term,” he added.
This principle can also be applied to real estate investing.
“If you take your money and buy a house, you’ll never make 30 or even 5 times your money in just one day or a short period of time. But I bet over time, though. In time, you’ll become a millionaire,” Baldwin said.
Buying and investing in real estate requires time and patience. However, this is a fairly simple principle. If you buy it and hold it for 20 years, you will sell it for much more than you paid for it in the first place.
Reference: CafeF
Source: Vietnam Insider