We all dream about what it would be like to have significant wealth and, for this reason, many people regularly play the National Lottery or EuroMillions in the hope of winning big. Others put their money into speculative investments such as Bitcoin in the hope of seeing their money rise in value exponentially. Yet theres a problem with these strategies theyre all get-rich quick schemes, and this approach to building wealth rarely works.
Burning money
For example, the odds of winning the National Lottery are 1in 45m. That means you could buy a handful of tickets every week for a lifetime or many lifetimes, in fact spend thousands, and never come close to winning a big prize. The odds of winning the EuroMillions jackpot are even worse, at around 1 in 140m. Good luck winning that one!
As for Bitcoin, just look at what happened there. Touted as an easy way to get rich in late 2017, Bitcoin has fallen around 80% since. That means an investment worth 10,000 in Bitcoin back in late 2017 might only be worth around 2,000 today.
The takeaway here is that there are no shortcuts to getting rich. With fast-track-to-wealth schemes, you often just end up losing money. Therefore, if youre serious about generating serious money, youre much better off focusing on getting rich slowly.
Getting rich slowly
Now, Im not talking about putting your money in a cash ISA or stashing it under your mattress. Thats not an effective way to get rich either. But what Im talking about is putting your money to work so that it earns a healthy rate of return of around 7-10% per year or maybe even a little higher and compounds over time, meaning you earn money on your past earnings.
Ultimately, thats the secret to building wealth the easy way. With a long-term investment horizon, compounding can turn even a small amount of money into a huge sum.So, whats the best way to earn that kind of return on your money and get rich slowly?
Proven wealth generator
Perhaps the easiest way to earn a healthy rate of return on your money, and take advantage of the power of compounding, is to invest in the stock market with a long-term mindset.
Stock market investing can get a bad reputation at times, because stock prices can be volatile in the short term, and you can lose money. Yet over the long term, stocks have proven to be a reliable wealth generator, with the asset class generally providing returns of around 7-10% per year, on average.
That kind of return can be powerful over the long term. For example, with an annual rate of return of 10%, 20,000 would grow to 350,000 after 30 years if left alone to compound over time. Thats certainly more than most people will win from get-rich-quickly schemes such as the National Lottery and EuroMillions over their lifetimes.
So, if you want to become wealthy, I say forget about all those get-rich-quickly schemes the odds are stacked against you. In my view, youre much better off focusing on getting rich slowly through the stock market. And if you want to know more about investing, youve come to the right place.
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