Three Steps To Wealth

by Dual Income No Kids on November 3, 2008 · 0 comments

The thing about personal finance bloggers is that we get caught up in the day to day trivialities of running a blog and sometimes forget about good content. In my view the purpose of blogging should partly be about communicating the best way to build wealth. While we DINKS are certainly not experts when it comes to making money, there are three things we have done which have improved our bottom line.

1) Saved money. Its a little old fashioned, but the processes of wealth creation is driven by saving and investing. In our case, we’ve been able to scrape together a house downpayment of approximately $30,000 and paid off a second trust of $32,000. The end result of the saving processes is affordable payments and less debt.

2) Bought and held high quality stocks. For example, we bought shares in Starbucks (SBUX) and Exxon Mobil (XOM). Holding onto both of our positions in these companies brought us gains in excess of 20%. In the case of XOM, we’ve seen a 40% appreciation in the value of our shares. We hit it big with Hansen’s Natural Corp (HANS), and made healthy pre-tax. Of course, we’ve seen plenty of looses, especially now after the stock market meltdown, but overall the buy-and-hold strategy has worked for us.

3) Started a small business. My wife and I have an efficiency condo unit that we rent out. Real estate has been a love hate experience with us. We tried to expand into a multi-family building two years ago, but sold the property. On the other hand, our condo unit has added thousands of dollars to our networth. The final point here is that the rental unit is basically a small business, we have one customer to whom we provide housing and utilities in return for rental payments. It works. The business puts money into our pockets.

To conclude, if you are really serious about becoming financially secure, you’ll take some time to find out what works. For us this has been three things: 1) Saving, 2) investing in good stocks using a buy-and-hold strategy and 3) starting a small business.

Best,

James

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