Advice...?

Question

I would like to become financially wealthy. I'm currently 18, and am set to start college in the Fall. I'm looking for any advice (or critiques of the advice I've listed below) that anyone cares to give me. Thanks in advance!

Here are a few things I've been told to do in order to become wealthy:

1. Attend college
2. Spend less than you make
3. Don't go into debt (including the use of credit cards)
4. Invest in mutual funds and set up a Roth IRA
5. Never buy brand new cars; their worth depreciates as soon as you drive off the sales lot

Answer 1

These are all great pieces of advice. I would contend with the first one, however, because it usually puts you $20,000-$100,000 in the hole before you make a dollar. If you need a college education (like me- a doctor), you can't really get around it, but there are a lot of jobs out there that don't require a colelge degree. Sure, you'll possibly get a higher starting salary with a bachelor's degree, but is that higher salary worth $20,000 + all the money you'd make while you were at school? My brother is a web designer and he went to school for it, but didn't learn anything. He did work through school and didn't have too much debt when he got out, but he also lost 5 years of prime earning (or travelling) time!

As for 2-5 above: great advice! The biggest mistake people make is that they spend above their means. I know doctors who earn over $200,000 a year, but spend $300,000 a year and are in serious debt. It's ridiculous. You don't need to make a high salary to become wealthy either- I know teachers who are on their way to becoming wealthy.

It's funny, a lot of this is covered in a great book I just read: http://www.amazon.com/gp/product/1600200400/ref=cm_arms_pdp_dp/102-8563907-0676949 . The point is to turn the tables on the system to profit. Check it out and good luck!

Answer 2

In this world, it is really difficult to do #3. Do you really want to be buying used cars for cash? Moreover, home ownership usually is a better cash use than is rentals, unless you plan to be moving every few years or so.

I'm not very keen about mutual funds. They are for lazy people, and often disappoint over a long term. You're better off with an index fund. Even better, you are better off learning something about stocks and buy them directly.

You should set a long term goal that is realistic. After all, you don't want to live as a hermit in a cardboard box while you save your money to become a millionaire at age 35.

Answer 3

These are all good. I would forget the Roth IRA though. The current rules state that the amounts withdrawn will not be taxed. I would be wary of government promises about not taxing something especially when it is in most cases so far off in the future. Politicians 25 years from now will not care what some other politician promised you now. Remember that social security benefits were initially not taxed. Now, 85% of benefits are taxed. You can't trust the government in this regard. Otherwise, your list looks good.

Answer 4

If you like reading books there is a great book out there called rich dad poor dad by Robert Kiyosaki it goes into great detail about the differince between Assets and liabillities. Wich every body says if you know the differince between the two you will become very rich

Answer 5

All very good advice. Add get into a 401K as soon as possible (your employer matches some of the money).
Good luck.