Embarking on your wealth-building journey may seem daunting, but take heart: the path to it is within your reach. Investing presents an unparalleled opportunity to grow your financial resources and establish long-term security. While building wealth, the underlying understanding is that you’ll be taking risks. The risk that you can lose some or all of your investment. If you can’t emotionally or financially handle looking at your account statement and seeing a negative return, then these strategies are not for you.

The first step is to articulate your financial aspirations clearly. Whether preparing for a major life milestone or securing your retirement, having well-defined goals will enable you to identify the optimal strategies to pursue.

There are two ways to build wealth: concentrate your assets or use the power of time and compounding.

The first is to concentrate your assets. People building a business do this. They put their money into their business, and if it works out, the owners get rewarded with profits. You can do this in the stock market, too. You can select one, two, or a few companies you believe will grow substantially. By far, this is the riskiest way to build wealth. Most companies fail, and most stocks on the market are average. High risk means a high probability of losing your investment. I've seen people make millions doing this; I've also seen people lose millions.

The other way is slow and steady. You use time and compounding interest to build wealth. You save a predetermined amount each week, month, or year to reach your well-defined goals. You invest 100% of these assets in the stock market. You diversify across many areas of the market. You consistently save and invest for years and decades during market upturns and downturns when things look good and bad. This method also has risk; sometimes, your investments could be down 50%, but if you have the time and discipline, you can be rewarded substantially over decades of investing. You’ll often want to check your returns against a benchmark to ensure your diversification isn’t underperforming similar mixes and make adjustments to keep your risk-to-return in line.

No matter what direction you take, you don't require substantial capital to commence your investment journey. Many platforms allow initial investments as low as $100. Initiating investment endeavors on a smaller scale offers opportunities to acclimate to the process while mitigating financial risk. Even some side hustle businesses don’t require much to get started, and as you make a profit, you reinvest it in the company to grow it.

In conclusion, building wealth through investing is a journey that demands perseverance, discipline, and foresight. By embarking on these simple steps, novices can confidently initiate their investment endeavors and set the stage for financial triumph.

Alan B Faerber CFP® CRPC®