Sort out your finances: Part 7, get rich slowly

We're nearly at the end of our easy, if not particularly quick, route to financial security. Get rich quick schemes wing their way from various West African princes to your email inbox every day. But get rich quick schemes never work, they're always a scam. Now is the time to think about get rich slow schemes, which do work.

Had, for example, someone around at the time of Jesus deposited £1 and earned a mere 4% interest a year he would now be worth £500,000,000,000,000,000,000,000,000,000,000,00 give or take a few 0s. You get the point?

The penultimate piece of financial action in this eight-point plan is: start an easy long-term investing plan.

In other words, take whatever spare cash you have every month and invest 70% in a basic, low-fee stock index tracker fund, and the remaining 30% in a bond fund, which you take out through a discount broker or fund supermarket (where the fees are lower than going direct). Then leave it until you retire.

The benefit of tracker funds are that they cost very little to invest in and they are run by machines so don't take silly risks. Instead, they slavishly follow the fortunes of a particular market, which over the long term is likely to be much better than a savings account. Bond funds are even lower-risk investments in Government and company IOUs. The big risk is if a company goes bust, but a fund will spread that risk for you.

Note: This is not investment advice, so do your own research. You can do this in your lunchbreak. It's not work.

Come back on Monday for the final part in this series, and Tuesday to learn how to make your children rich.

Reference points

>> Guide to tracker funds
>> Guide to fund supermarkets
>> Guide to bonds
>> Visit a fund supermarket
>> Fund tips for novice to expert investors

Sort our your finances

Part 1 - the will
Part 2 - the credit card debt
Part 3 - the life insurance
Part 4 - the company pension
Part 5 - the house
Part 6 - the emergency savings
Part 7 - the get rich slow plan
Part 8 - the fee-based adviser

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Comments

[Monevator]

Good advice. Don't forget you can get bond exposure via an ETF such as those made available by iShares. That'll be cheaper than going through a bond fund, and the extra cash could compound up to thousands over the years. If share fund managers can't beat indices over the long-term, then I'm sure bond managers can't either.