I love the original Karate Kid movie where Daniel-san wins the tournament. My view of why he won the tournament is because he focused his energy on the things he could control and mastered the fundamentals first. In sports and in wealth management, I see too many people focusing on the fringe areas and not mastering the basics. Here are my fundamentals as it relates to managing wealth.
- Live generously and give to charity.
- Have your money work for you, not against you… stay out of personal debt.
- Regularly save 12% of your earnings.
- Invest in your workplace retirement plan and take full advantage of the matching contribution.
- Buy your own home.
- Diversify your investments to maximize returns and minimize losses.
- Stocks are one of the best ways to create wealth over the long term, but remember stock values will fluctuate over the short term.
- The tortoise wins the race. Invest consistently and do not try to predict the best time to be in or out of the stock market.
- It is better to buy low and sell high.
- Things will cost more in the future.
- Your money grows faster if you pay no taxes.
- It is generally better to pay taxes later than sooner.
I would share this with any young person in your life that is interested in having a secure financial future. The basics are what get you across the finish line. As Mr. Miyagi says, “First learn stand, then learn fly. Nature rule, Daniel-san, not mine.”
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