—but first, you need to learn to save money and find ways to earn extra income, which you can then channel to investments of your choice. To serve as an inspiration, here are the investment success stories of some individuals:
1. The Gift
Former postal worker Victoria O’Hara got learned about investing when she started living with her uncle Richard and his wife Carol in her early twenties. Her uncle was the one who educated her on investment, providing her with reading materials such as Barron’s, The Wall Street Journal, and Bloomberg. Before he died of cancer, Richard instructed his wife to let Victoria choose a single stock of her choice and buy it for her on her birthday.
Victoria chose Quaker Oats, where she bought one share for $45. She slowly increased her investments, spending $10 or more every other month for more stocks. Soon after, she bought stocks from Wendy’s and then ShareBuilder, an online brokerage firm. She also invested in Netflix when it was still $16. From an initial investment of $45, Victoria has so far yielded $60,000.
She advises interested investors to invest slowly but steadily, even if markets fluctuate. In her Learnvest interview, O’Hara advised researching and watching stocks well before buying; and to only invest in companies you believe in.
2. The New Property Investor
Rocket Property Group advisor Lindy Lear started late in the field of investing but her portfolio has now grown to eight properties in three years. She started investing in new properties categorized under the turnkey package, which allows home buyers to buy a completed house—all they need to do is “turn the key” and move in.
According to Lear, the primary advantage of this type of investment is the good flow of demand from potential tenants would be ready to pay premium rent for a brand new home that already comes with everything, and without them needing to think about details regarding construction, etc.
In one of her most recent investments, Lindy was able to sign up a tenant who pays a rent of $400 a week in a prime location, giving her a 5.6% yield in her investment. The cash flow had been positive for her since day one. Lindy stresses the importance of knowing what her savings and borrowing capacity will enable her to purchase.
3. Power Couple
Helen and Jeff Brown from Indianapolis invest in mutual funds with strong records. They now have 60% of their assets in stocks and 40% in bonds and cash. Both being diligent savers, Helen have been saving 35% of her wages since graduating college. The couple also sets aside 33% of Jeff’s personal income. According to Kiplinger, Jeff spends 30 hours a month tracking the family’s assets, debts, and investments using Excel spreadsheets, to ensure that they are maximizing their tax-privileged retirement and college-savings accounts.
4. Frugal Billionaire
One of the world’s riches men and most successful investors, Warren Buffett, CEO of Berkshire Hathaway, has an estimated USD 58.5 billion to his name, as of 2013. The “Sage of Omaha” advises investing in underpriced establishments that has fundamentally strong worth. He also stressed the importance of making long-term investments through value investing.
Despite his vast wealth, Warren is a firm believer in simple living. The billionaire advises young people to stay out of debt, invest in one’s self, and to never stop learning.
5. Foreign Investor
Boston consulting firm program manager Max Dufour struck gold when he invested in foreign shares, which he did to keep his portfolios stable in case local economic prospects decrease in value. According to Marketwatch, Max’s international investments are now equivalent to 40% of his portfolio. He says “it makes him calmer to have his eggs in not just one basket.” His investment has increased to 50% from 37% in the S&P 500 market index in 2008.
6. Shifting to Corporate Bonds
Fujitsu engineer Ron Omohundro decided to change his investment style of buying and holding when he saw overpriced U.S. stocks in 2007. He began transferring most of his portfolio to corporate bonds, as well as dividend-paying stocks, which helped minimize the effects of the crash around the time. He advises investors to trade off their stocks in exchange-traded funds for foreign stocks and commodities, and to avoid riding down the market 20% and then holding on until it returns.
7. Treasury Bonds Investors
Another couple who gained earnings from modifying investment strategies is Kendall and Mark Youngblood. They decided to go for a different approach other than the traditional buy-and-hold when 2008 did not show promise for their investments.
Marketwatch reported how the couple decided to move a quarter of their assets to Bandon Capital Management, which shorted Treasury bonds and used traded funds to combat declining stock prices, as an alternative investment strategy. The couple’s portfolio grew by 3% by 2008, as opposed to the overall stock market which dropped by over 30% in the said year.
8. Student Investor
With her father killed and her mother severely injured from the Rwanda genocide in 1994, Flaura Ingabire has become sole breadwinner at an early age. She ran her first business when she was only 16, tending to a small bar in her village. She continued to venture into other businesses, from selling fabrics and shop keeping to leasing out phones to villagers who would like to make calls in rural areas.
When she studied at the university, Flaura continued to find more ways to earn. She ran a small canteen and bought a photocopy machine with a loan she took on, offering her services to students and professors. Through hard work and investing her money on worthwhile business endeavors, Flaura was able to pay for her mother’s hospital bills, send herself and her sister to school, and support her family.
Not everyone of us can be billionaires like Warren Buffet but if you have the interest and the aptitude, you can certainly give investing a shot for a chance to multiply your income. The ambition to be wealthy is surely one of the reasons why you should save money. As in the stories above, your savings can go a long way if you make the right investments. It definitely takes a lot of patience and good timing. It is also important that you don’t give up.