long term savings you must

Short of investing.... Long term savings is the next big thing if you want to be rich. If you just invest without savings you won't be rich. Here are some tips on saving long term ( that is where the big money in savings are):

House down payment

How much: $20 % of your intended house
When to start: 5 years before

Owning your own home is one of the most important financial decisions you can make for yourself and your family. Real estate can certainly be an investment, but you should not view it as a quick-flip opportunity. Over a course of several decades, real estate prices tend to appreciate, but they are not immune to short-term price fluctuations. Buying a home can be a very emotional decision, but you should not let feelings interfere with the business aspect of your decision. First, estimate what an affordable monthly payment would be based on your income, then find a house within that price range -- not above, no matter how much you adore the house itself. Then, aim to save at least 20% of the purchase price for a down payment. It is a lofty savings goal, but it will help your personal finances enormously as it will help you avoid the PMI, obtain a more favorable interest rate from the bank, and it may even help you negotiate the price of the house. Sellers are more interested to work with prospective buyers who are serious and have the real means to make a purchase -- which means a 20% down payment. Talk with your employer about depositing a portion of your pay check directly to a high-yield savings account ( or ASB) to get your must-have long-term savings in order for a house down payment.

The formula

• Monthly payments (interest, principle, taxes, insurance): 28% of gross income.
• Total house purchase price: 2-2.5 x total gross income.
  

Retirement account

How much: $5,000/yr
When to start: Now


Regardless of your income, this must-have long-term savings goal is not an optional expense, and should come before many things, such as saving for your kid's education. You can make your annual contribution as early as the first of the year and as late as April 15 of the following year. You can take advantage of these factors in one of two ways, the first of which is to fund as early as possible. It may put a short-term damper on your cash flow, but you can have that $5,000 working for you a whole year earlier than if you had waited until the last minute.

Education savings

How much: $200,000
When to start: Now (if you have kids or are expecting)

If you have kids or will have kids one day, you can be certain that paying for college will be a serious issue -- and realistically should not be an option considering that, on average, someone with a college degree makes about $800,000 more during their career than someone without a degree would. If you just had a baby, expect college to cost, at present, $15,000 per year, and up to over $59,000/yr in 17 years. Just like retirement, the sooner you can start this must-have long-term savings account, the better, as you will likely have less time to amass cash for college expenses. A relatively aggressive mix of stocks should be used as historically, stocks have outperformed bonds and savings accounts. Specifically, considering the average 7% per year increase in college costs -- the 3% savings account or the 4% CD is not going to cut it. If it comes down to a choice, you should fund your retirement account before you stash away cash for your kids' college expenses. While it is not ideal to have your loved ones saddled with debt after college life, student loans are always an option -- retirement loans do not exist.

Formula

College costs increase about double the inflation rate, 5%-8% per year

Emergency fund

How much: $500-$1,000
When to start: 0-3 months

We're all smart enough to understand why it's important to have a cushion of cash in the bank. Unfortunately, it's easier said than done, especially when the experts are saying you need to have cash on hand to cover three to six months of living expenses, should the worst happen. That might as well be $1,000,000 in today’s world. Start simple and just commit to always having $500-$1,000 on hand in a savings account linked to your checking account. This will be a savior when it comes to things like bouncing checks or dealing with more common emergencies like speeding tickets or insurance deductibles. Even in the event that the emergency exceeds $500, that must-have long-term savings stash will help you tremendously. Don’t wait on this -- just do it -- and make it your first priority. The feeling of being in control of your finances will do wonders for your financial confidence in the long run.

Formula

• Put $500 aside now and work from there.

have the right attitude

Of course wanting to be rich itself is not enough. There are certain behaviors that has to be imprinted within you so that you have the right attitude for the path of richness . Among my suggestions are:


1. Think about the pennies.
Every penny counts. Sometimes you may think its just a couple its just nothing and you should forget about it. Wrong! it all starts with the ignorance of a penny and then progresses on to larger denominations. Before you know it you will be spending more than you are making.
Nevertheless, this does not mean that that you have to be stingy with your family and friends. A penny extra goes a long way in building lasting relationship to which it may turn to a more money making ventures. And don't even start on the gratitude part

2. Optimize and save

Once you have establish the importance of pennies and pounds its time for you to save them appropriately. make sure that each of those extra pennies count to savings. Big amounts can go to the bank. but its the little ones that you may need to save. Its not the matter of how much you save but its a habit for you to eliminate wastage. Wastage is a rich man's no. 1 enemy.

Of course you don't save when it comes to things that are more important. Things that would make you actually lose more than you save. for example you waste time looking for your 1 ringgit note where at the same time you are missing a multi million dollar meeting. That's just penny wise pound foolish.

3. Invest, Invest, Invest

Saving alone won't make you a rich man... yes, you can live a comfortable life, but you won't get rich. Time and time again the world has proven only the people who invest are the one who gets it all. Be it on you own business or property or some else's business

Besides business, investing is your second best chance of getting rich minus the hard work of growing a business.

When talking about investment there are of course a certain attitude mold to follow in order to be a rich investor. It is a characteristic of a successful investor to be a risk taker. For obvious reasons, the higher the risk the higher the returns. But be reminded a rich investor despite taking risk, the risk taken is a calculated risk. Taking risk without any basis is just plain foolish and definitely an attitude that could make you poor

4. Live with no regret

Many skillful people trying to be rich gets trapped in this limbo. They all begin with an optimistic view of being successfully rich. After failure of the first attempt many gave up for a not so rich and but comfortable live. In the end of the day their life do not involve any risk because they are scared. Hence their wealth is stagnant and do not grow as much over time.They become the classic of being conservative.

A person that aspires to be rich must not fall into this trap. Positive attitude despite failure is important in order for the perseverance attitude to thrive. Failure in the beginning at most times are imminent. One must not give up but instead use it as a lesson for the next get rich project.

Things happen. It's your choice to be in the right get rich attitude of seeing the half glass full or live as a cynic by seeing the glass as half empty.

It Starts today

The interest is there. However, the creation of this blog marks the turning point of idea of being rich to just the confines of coffee shop talk. This blog would not only act as a central repository of business ideas but also acts as a discussion forum to strengthen the ideas of being rich

As being rich is about diversifying, My post would be categorized to the following sections:

• Investments
• Starting your own business
• Ideas and discussions
• Projection

As this blog is alive, contents may evolve through time. As such do check often as when times go on, contents may be obsolete. However, it is my intention to keep all contents publish and archived so as to be able to trace to be able to trace the developments of be it a model, idea or even to track progress on projects.

Constructive comments are welcomed!