The road to wealth is simple.

Follow a simple set of instructions and you will be wealthy.

Here are the instructions:

1. Earn some money
2. Spend less than you earn
3. Invest the rest

Follow these instructions blindly, without second-guessing, without optimizing, without arguing, and you will have no choice but to be financially well off.

1. Earn some money

We live in a world full of so many opportunities. There is no reason why anyone should be unemployed. Not even one day.

I came to Canada as an international student. I didn’t have a work visa and I didn’t speak French and even under those circumstances, I found many job opportunities.

But seriously, in a world full of Ubers, Airbnbs, TaskRabbits, and so many other platforms, there is just no excuse. I have made money with Uber and Airbnb and in so many other side gigs. I have NEVER been unemployed, even when my English and French were very poor.

2. Spend less than you earn

It’s almost inevitable. We want to spend almost to the limit of our earning potential. If we earn $100, we want to spend $100. Sometimes $105.  No matter at what stage of life we are, we are constantly maxed out.

In many ways, advertisers paint a picture in our mind, make us believe that we deserve this, and the other and we give them everything we have.

I have had the same conversation with people who earn $20, 000; $40,000, or even $100,000. There is always one reason why they are unique and why they can not spend any less. I have spoken with very smart individuals and they have amazing excuses, but at the end of the day, those are only excuses.

As I was having a conversation last night with a friend, she was telling me why she wasn’t able to save. I challenged her on that. I asked her: “Isn’t it true that if saving was your #1 priority right now in your life, you would be able to find a way to save money?” She admitted it. She could save money if she set her mind to it.

During my podcast conversation with William Fenelon on the podcast “How to save $9 million on a secretary salary”  William argued that if everyone was frugal, the economy would not function, we are a consumer society. True, the economy would not function as it is, but our main concern is not the economy, that’s the concern of the politician, our main concern is our own bank account. On your retirement years, it would be sad if you say to yourself: “I am broke, but I helped the economy.”

I have two friends who are fashion consultants. They claim that dressing well can give you a lot of confidence. That might be right for a short period of time, but nothing gives us more confidence than having a broker’s account with many thousands of dollars. I know a few millionaires who dress from Walmart and Winners, they have nothing to prove. And I know a few people who always look so elegant but they full of insecurity because they don’t know how they are going to balance their books at the end of the month.

Invest the rest

This is part of personal finance that can create the most confusion. Hundred of advisers, consultants, institutions want to show us how to invest our money; for a small fee, of course.

Canada has some of the most expensive mutual funds in the world. Canadian mutual funds charge 2.5%-3% for their inferior services. Some advisers charge 1% of your total assets.

There are hundreds of advertisers who claim that if you buy their program, you too, you can become rich.

My friends have invited me a few times to go with them to watch a seminar about how to trade, how to increase my portfolio by a huge percentage. My answer is always the same: “if they can produce such gains, how come they are not millionaires? How come they make their living from selling these courses instead of doing what they preach?”

One of my friends borrowed $30,000 from different credit card companies to invest in cryptocurrencies. Another one of my friends invested most of his fortune in Apple and in marijuana stocks. Another one trade options and spends numerous hours of his day looking at the wiggles on different stock charts.

All we have to do as an investor is put all our money in broad-based index funds. If we see the Spiva Report, we soon discover that 80% of money managers DO NOT beat the index, so why waste your time following formulas or people who, at the end of the day, continue underperforming the market.

The secret of investing is simple

Yet, the secret of having a successful portfolio is so simple that it gets discarded almost immediately. Here it is:

1. Invest in broad-based index funds or ETFs
2. Make sure your cost is less than 0.5%
3. Don’t touch it. Don’t trade it. Just leave it there through the ups and downs of the market.

Conclusion

Follow these rules, without questioning, without thinking, without optimizing, without excuses. You will have no choice but to become wealthy. You will have financial security, more self-confidence, more piece of mind.

True, money doesn’t buy happiness but neither does poverty. And a lack of money can be the cause of stress.

Related Posts

1. Stocks should be 100% of your portfolio
2. 020 How to save $9 million on a secretary’s salary
3. My favorite Vanguard ETFs for Canadians

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