To become wealthy you can't rely solely on one income stream - the annual savings from your employment income. You need to develop more income streams. One way to do this is to get your savings working for you. ​Investing your annual savings will create a second income stream - the investment returns/earnings generated from your savings each year.

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You work hard to earn your money. You also made sacrifices (denied wants) to save your money. Therefore, when investing it is critical that you protect what you have. At the same time you do want to make it grow. To do this you need to invest wisely.

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To invest wisely, you need to get two things right:

• Develop/implement an investing framework that works.

• Have an emotional makeup that is a fit with your investing framework.

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An investing framework that works

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Invest using broad based stock ETF/index funds. 

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This is a great strategy if you are an investor with a long term time horizon. And stock market volatility does not bother you.

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However, this is a terrible strategy if you can't handle stock market volatility - and you panic and sell all your stocks when the market sells off 30%.

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What messes most investors up when it comes to investing isn't their brain, it's their gut. When I ran a financial literacy club at my kids high school I introduced the stock picking unit by showing the picture of a person throwing up over a toilet - that is what investing in stocks is going to feel like at times. Can you handle it?

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What is investing?

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“An investment operation is one which, upon thorough analysis, promises safety of principal and an adequate return. Operations not meeting these requirements are speculative.” Ben Graham​​

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To invest wisely you need to do two things:

• Keep it safe. 

• Earn an acceptable return. 

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To invest wisely, it is also good to know what to avoid:

 

“A fool and his money are soon parted.”

 

Life advice:

• Don’t gamble (part 1). Vegas. Especially if you have an addictive personality.

• Avoid divorce. 

• Avoid spending as a status symbol.

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When investing: 

• Keep expectations of return reasonable. Equity portfolio 6% to 8% per year. More is simply a bonus. 

• Don’t gamble (part 2): Don’t try and pick individual stocks.

• Avoid get rich quick schemes. Hot tips. This usually results in get poor quick. 

• Do not develop a FOMO mentality - Fear of missing out.

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What do you need to do to get this second income stream set up and generating another income stream for you?

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1. Open an investing account. You need to decide on the type of account you want to open: full service or self-directed?

   • Click here for more.

2. If you decide to go the self-directed route, invest in broad based ETF/index funds.

   • Click here for more.​​​

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What is better - stocks or bonds?

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As a general rule, you want to be an owner (stocks). Not a lender (bonds).

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What is the best way to invest?

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Via broad based ETF/index funds. The greatest invention for average investors of the past 30 years. Something that will allow tthem to earn hundreds of thousands of dollars more over their lifetime than in the past. A great example of how life continues to iimprove for people, especially young people. 

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Think / invest for the long term.​

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This is much more difficult to do than it sounds.

• Psychology: Humans are not wired to think long term.

• Wall Street: The financial industry exists to extract fees from investors. It teaches that short term thinking, activity and speculation/gambling is the proper/best way to invest.