Don’t derail your path to financial success.
Small changes in thinking and behaviour can accelerate your progress towards your long-term financial goals.
Here are six small things that are likely holding you back from becoming a millionaire in the years to come:
1. You’re not tracking your goals
If you don’t measure it, you won’t change it.
Good or bad, up or down, tracking your goals is essential to highlight your progress and shine a light on where you can improve. This can be as easy as sitting down to review your assets, liabilities and income as a first step, with regular reviews after that.
2. You’re not saving money
Saving money should be an automated process that you don’t have to think about. If you have debt, pay that off as quickly as possible and set up automatic bank transfers for the day you get paid.
3. You’re not shopping around
Paying too much for little things like credit card fees and flowers quickly adds up. This is money you could be saving, investing and growing.
The internet gives us access to such rich pricing information that you should be able to walk into almost any shop fully informed that you’re getting the best price, or quickly track down an alternative.
4. You’re not managing your risk
Wiping out because of high risk behaviors like chasing ‘hot stocks’, borrowing to invest, and failing to diversify will definitely hold you back!
Billionaire investor Warren Buffett suggests that people who don’t have the expertise or interest to pick individual companies should consider index funds which spread risk across many different companies.
5. You’re not compounding your returns
I truly believe that compounding returns is by far the most effective way to build huge wealth over time. Investing in strong, growing businesses similar to CSL Limited (ASX: CSL) and reinvesting dividends will get your money working harder.
CSL is one of my favourite case-studies in compounding, having turned a $1,000 investment into over $200,000.
6. You’re thinking about the share price, not the business
Taking the perspective of a part-owner in a business can focus your attention on the objective of long-term earnings growth, rather than the ups and downs of the market.
For example, understanding how competitive pressures will hold back Telstra Corporation Ltd(ASX: TLS), or how accounting platform Xero Limited(ASX: XRO) keeps winning in new markets will give you a sound basis for evaluating changes in share price and prevent your emotions taking control.
You can follow him on Twitter @Regan_Invests.
The Motley Fool Australia owns shares of A2 Milk and Xero. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.