5 investing habits that will make you a millionaire

Jaspreet Singh / Jaspreet Singh

In a recent video, financial guru, lawyer and entrepreneur Jaspreet Singh said, “You can make money without having to physically go to work, and you can make a lot of money without even being a doctor.” When Singh was growing up, he was told, that to be financially successful, he there was to be a doctor. Yet as he got older, he learned about the world of investing and eventually realized there were other ways to build wealth.

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Many people just spend instead of investing

Singh explained that while many people buy luxury items like the latest iPhone and Gucci bags, these same people end up with no money to invest. In fact, CBS News reported that 4 in 10 high-income Americans, or those earning more than $100,000, say they live paycheck to paycheck.

“Before you can really see any success in the investing world, you have to stop spending money on things that don’t make you money, and you have to start spending your money on things that make you money,” Singh said.

Many people think that rich people have big salaries and earn a lot of money, that’s how they become rich. Contrary to this belief, realizing that investing in assets is what makes you rich will be the key to your own wealth.

5 habits that make millionaires

Singh describes 5 investment habits that will make you a millionaire from his point of view:

1. Stop wasting money when you have no money to waste

Many people live within or beyond their means – meaning they spend everything they earn each month. Alternatively, some people spend more than they earn just to have nice things and rack up debt in the process. This behavior hinders investing because you don’t have money left over to buy investments each month. Once you start using your active income to buy assets that bring you passive income, you’ll start building real long-term wealth.

2. Live off your passive income instead of just your active income

Active income is the money you make from your job or your business. If you stop working, you stop getting paid. Meanwhile, your passive income is when you make money through your investments, whether monthly or yearly. Passive investing is one of the keys to real wealth. You don’t have to go to work to earn money this way. You buy passive investments and they keep paying you over and over again. This is a major reason why rich people make so much money. It’s not just because they have a big salary, it’s what they do with their money.

3. Understanding the value of your time

Time is your most valuable commodity and one of the only resources you cannot create more of. You can always get more money, but you can’t get more time. Finding ways to make more passive investments allows you to earn more money without having to go to work to get it. Over time, through consistent investing, you should be able to reach a point where the interest, dividends, or payments from your passive investments earn you enough money to pay you back your time. Instead of working for all your earnings, your money will start working for you.

4. Understanding the long game

Many people learn about the idea of ​​investing and get excited. You might start investing money and then start hearing about investments like day trading and penny stock trading where you can seemingly make a lot of money very quickly. Yet most importantly, the investors who make the most money are the ones who play the long game. With time on your side, your investment can grow and compound, making you more money in the long run and carrying less risk.

5. Understanding the value of learning

You may think that college is necessary to become successful and that the better you do in college, the more money you will make. While college is important, it’s very possible to learn a lot outside of the classroom.

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From Singh’s point of view, these are five key investment habits and lifestyles that, if followed from an early age, can set you on the right path to becoming a millionaire.

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This article originally appeared on GOBankingRates.com: Jaspreet Singh: 5 Investing Habits That Will Make You a Millionaire

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