You can become rich in many different ways. The most common ways is becoming rich by investing in homes, stocks or crypto. But there’s also a lot of people who becomes rich by starting their own business or making a great career. Then there’s the lucky ones who get inheritance or win the lottery jackpot. We will walk through the 5 most common ways on becoming rich and the most likely ones for you to aim for.

Invest in real estate and become a home owner

Many people have made a fortune by investing in real estate, living in it for a number of years, and then selling at a higher price. Housing prices have generally been increasing over a long time, and the explanation can be found in particular in the rising wages and inflation. Therefore, many people have built a fortune simply by investing in real estate if they have owned it for many years.

Of course, there is also a risk that prices (and thus one’s wealth) may fall, but seen over a lifetime, investing in a home (or other real estate) will almost always be one of the most decisive investments for your life.

In addition to the fact that you as a home owner can benefit from rising house prices over time, home owners also often have the largest savings. This savings comes from the fact that homeowners, instead of paying rent to a landlord, spend a lot of money each month paying off their mortgage. By paying off home loans, the remaining debt falls, and this helps to provide a greater net worth and wealth.

If you want to invest in real estate, a loan will usually be necessary.

Invest your savings and get a good return

Even a small fortune can grow big if you ensure that you benefit from the compound interest effect. The best way to do this is to spread your investments across several different types of assets, and continuously reinvest your current return.

To get a good return on your savings, you can e.g., invest your money in shares, bonds, properties, investment funds, etc. An easy way to take advantage of the compound interest effect is to invest your money in an accumulating investment fund, as this type of investment fund automatically reinvests the current profit.

If you are considering investing your money in shares, you should, as far as possible, avoid trading too much, as many trades increase your costs. Many studies point out that you should buy shares with a long-term focus, and the starting point that you want to keep them for life.

Another sure way to increase returns is to keep the costs (e.g., brokerage and custody costs) of your investments down as much as possible.

Spend less than you earn

It’s the oldest trick in the book, but it’s a viable solution nonetheless. That way, you are sure that you have money to pay unforeseen expenses and necessary investments. In this way, you avoid being forced to take out expensive consumer loans or make expensive installment plans.

At the same time, you can also benefit from having some capital that you can invest, and thereby get a positive return on your savings. We have written about this in more detail under point 2. Over time, the combination of saving a significant part of your income and subsequently investing money in e.g., shares, bonds, properties or other securities, lead to a huge fortune. The most important challenge is not to be tempted to spend your money here and now on consumer goods – it’s harder than you think!

In addition, one should not underestimate the value of having control over one’s financial situation and control over one’s consumption. Consider what is needed in your mobile subscription, internet or in your TV package. This does not mean that you have to scrimp and save all your life, but with a little common sense, most people can get extra air in the economy, thereby freeing up most of the money for savings and investments.

Get a good education

A good education is one of the biggest safeguards for a good economy throughout life, and is therefore often of significant importance for how one becomes rich.

Even if you are never guaranteed a job, can’t always count on getting a salary after your education and never know what will happen in your life, a good education will lay a good and solid starting point for getting a high income.

Most people with good long educations get a high fixed salary, paid holidays and a good pension scheme, and are thereby both assured that there is enough money to live a good life and at the same time save up for old age. A good education therefore gives the economy room to invest, and thus the opportunity to earn a small fortune.

However, you must be aware that a high salary usually leads to a higher consumption – and then it becomes a little irrelevant (if you are looking to get a large fortune). But if you also manage to stick to point number 3, to spend less than you earn, and at the same time invest your savings wisely, you have a very stable basis for becoming rich.

Inheritance

Inheritance is an explanation of how to get rich, for many people. However, it is not something you have control over, but if you inherit it is important to invest it properly, and not squander it on consumer goods, self-indulgence and other unnecessary things. p

Even a small inheritance can grow big if you invest it right, or the inheritance can help you pay off an expensive bank loan, consumer loan or something else that eats away at your finances every month.