Making your first million | Appreciation
Wealthy people don’t keep their money in cash; they have it invested in assets that will go up in value. Assets that tend to appreciate are land, property, equities and commodities. You need assets that appreciate quite fast to become a millionaire quickly. If you have a £1,000 or a $1,000 and you invest in something that appreciates in value quickly; perhaps doubling in value every year. You would become a millionaire in just 10 years! Can’t be done right? Maybe it can…
To make this happen you have to understand money and assets. Many assets go up in value and money goes down in value. Governments print money and devalue it all the time. In the UK inflation has been around 5%, money is losing it’s buying power at 5% every year. If you have a million pounds this year over the next year it is likely to be devalued by a massive £50,000 and so you have to invest it.
The sensible way to invest is to be diverse and invest in different asset classes, property, equities and gold perhaps? If you want to become a millionaire quickly; then you have to take a much bigger risk. This could be just the right time to try to get a high return on your money. Stock markets have been doing badly and it’s a buyers market now as people sell shares that have plummeted in value. In a market there are sellers and buyers; when the sellers outnumber buyers, prices tend to be low. Many shares on the London Stock Exchange that used to sell for pounds are now selling for pennies. It is a risk though, we hear of companies going into liquidation all the time. The latest one to get into difficulties has been Kodak and so it isn’t just small companies that can have problems.
Is it a good time to buy equities and build a portfolio while shares are cheap? I have written two investment blogs so far, I wrote one when I bought Premier Foods for 4p a share, they are over 11p today, so doing well. I also bought Lloyds Banking Group for just under 30p and they are at 34.38p today. I haven’t quite doubled my money but considering I only bought them just over 3 months ago; I think it’s going well so far. If the Western world can sort out it’s problems and the Eurozone crisis is fixed and we can get back normal; these shares could go back to being worth pounds instead of pence! That would be nice! The government owns a chunk of Lloyds too and an even bigger share of Royal Bank of Scotland. If RBS went to a few pounds a share, the government could be in a position where due to the austerity measures they have less money going out and investments worth a huge amount of money. The government owns 84% of RBS and when you consider the bank once had assets of £1.9 trillion and was the world largest bank; you get some idea of the money involved. If the government finds that those shares are worth a few pounds each and it’s 41% investment in Lloyd’s Banking Group is doing well too; they might even cut taxes!
You have to ask yourself what the future holds. The Olympics will be held this year and it’s the Queen’s Diamond Jubilee. How will these events affect the economy and what other events are due? The Olympics could make some travel companies that are struggling now, a better investment. What do you think? Can you think of any companies that might do well this year?
Life is a risk and if you want to become a millionaire you have to take a lot of risks. You don’t win the lottery unless you buy a ticket!
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- Finance | Appreciation and Depreciation (mike10613.wordpress.com)
- Taxpayers lose £900million as RBS and Lloyds share prices fall over bonus backlash fears (dailymail.co.uk)
- European Banks Rally: What Eurozone Crisis? (wire.kapitall.com)
- Millionaire’s Judge their Wealth and Assets (retirementmoney.wordpress.com)