Ask anyone if they would like to retire rich and almost without exception the response will be a resounding "yes".
However, ask the question of people if they are actively doing something about it and the response is likely to be significantly more muted!
One of the hardest things for people to consistently do is to put aside some of their earnings and save for the future.
It's certainly not easy to be a disciplined saver but spending less than you earn is a tried and true way of growing your wealth.
If you are in fact already living within your means and diligently setting aside a little each year to meet your long term goals – congratulations, you're already on your way to retiring rich!
If you're not a net saver just yet, don't despair, it's not too late. Start today!
Once you've mastered the first step, saving, the next step is to invest those saving and earn a reasonable return on your money.
For some people, this means bonds, fixed interest or deposit accounts. For others, this means property – that's fine – each to their own. For me, and perhaps you, it means equities.
Will you be a passive or active investor?
This is a big decision. A passive investor will choose an index fund and be content with the market return – that's no slouch – the market is tough to beat and its long-term average historic performance (compounded) has been more than adequate to help you get rich.
The alternative is to try and beat the index by being an active investor. This means you (or whomever you outsource the job to) will need to pick individual stocks and manage a portfolio. There are risks with this approach – you could underperform the market – but also potential rewards – you could end up even richer!
If you're starting out with an active approach, it can be wise to stick with proven, large businesses to create a solid foundation for your portfolio to grow from. Stocks like Domino's Pizza Enterprises Ltd (ASX: DMP), ResMed Inc. (CHESS) (ASX: RMD) and SEEK Limited (ASX: SEK) could make reasonable foundation stocks to build upon.
These three companies have global operations, significant market share in each of their respective markets and importantly plenty of future growth opportunities.
