Two Simple Steps to Future Wealth

The main area you should spend your time is learning to save money to build your investment funds. The average person gets ahead by learning how to budget, how to save money and how to be frugal, not by monitoring what the stock market does on a daily, monthly or even yearly basis. It's in your financial interest to spend your time figuring out ways to save money rather than trying to find ways to trade in and out of market volatility. It is far easier and rewarding to your bottom line to save money than to try and get a better return rate.

There are a number of reasons for this. The most important is that it is not a choice of either investing in the stock market or saving money. When you spend your time looking for ways to save money, you can then take this money and also invest it in an S&P 500 Index fund without it taking any additional time figuring out which stocks to bet on.

Index investing allows you to receive the benefit of compound interest while having a larger base of money to place into the investment. Even if you were a genius stock-picker, you would have to generate double-digit returns over the S&P 500 on a yearly basis to have a chance to compete with someone who learns how to wisely save money.

For example, let's take someone that earns $50,000 a year. If that person normally saves 10% a year and then spends five hours a week investing to achieve a return of 15%, the person would end up with an investment totaling $5,750 at the end of the year. This scenario would be a return that most people would be ecstatic with.