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A wise man once told me that if I got into the habit of putting away a little money all the time I could save my way into a fortune.

There are three factors that work to determine the success of making a fortune:

Systematic Saving

Rate of Return

Systematic Saving

The average person has a working life of about 40 years. If you were to look at all the money you made during those years, you would see that a fortune passes through your hands. The idea is to keep as much of that fortune as possible and concentrate it for uses that you want.

If every week when you got your pay you put away ten dollars for yourself, what would be the result? Think of it using our forty year example and you would have amassed over $20,000!

While $20,000 is not a fortune, neither is $10 per week. Then of course this amount of money is just cash with no growth at all.

The most important thing to note is that it is the systematic savings that makes for money to be used as the "tool" to make your fortune. The basic rule is to "pay yourself first." If you think of yourself the primary bill that you must pay first, then you will be on the way.

The next two things that are needed are a rate of return, and time.

The rate is the return on savings and/or investments. This is usually stated in an annual percentage. While most people don't concern themselves with rates, a difference of one or two percent can make a huge difference in the amount of money that an investment returns over time.
Also the effect of compounding is important. If you take a simple return of 5% and compare it to a 5% compounded rate over just 5 years the difference in return is about 1%. If you were to use that for a $10,000 investment over a 10 year period would be close to $1000!

Percentage return and compounding of return are key elements in any plan to grow wealth.

Time is the greatest ally or enemy of the investor. For example if you were to put an investment of $100 per month in an investment which returned 6% annually compounded and continued it for 12 years. You could then stop investing and withdraw $200 per month forever and never deplete your balance!

A $1000 investment at the same 6% compounded annually given to a child at birth. At 24 the same child could start investing $100 per month at the same rate and would never match the value of his birth account! Time combined with compounding rates are powerful tools in wealth building.

The rules are simple. Systematically save; Get the best Rate of Return; and Start as soon as possible. The method is simple but the execution is difficult.