A 30-year-old self-made millionaire shares 4 investing principles to follow in 2023

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  • Todd Baldwin has built a seven-figure net worth through smart investing. 
  • He shares four investing principles that anyone can follow in 2023 to build wealth.
  • Two include: Invest in what you know and diversify. 

Todd Baldwin knew he wanted to make a lot of money from a young age. 

He was raised by a single mom, watched her struggle to make ends meet, and never wanted to feel that same level of financial stress, so he started working from a young age. One of his first jobs was making sandwiches at Quiznos. 

His first salaried job was in commercial insurance sales. He earned enough from his salary plus commissions to start investing in real estate in his early 20s. He bought a six-bedroom home outside of Seattle, moved into one of the rooms, and “house hacked” by renting out the other rooms.

​​The rental income not only covered his entire mortgage payment but also left him with a profit each month.

Baldwin, now 30, has been growing his real-estate portfolio ever since. By age 25, his net worth crossed $1 million, mostly thanks to rental income, he told Insider. At 28, he became a multi-millionaire and felt comfortable leaving his day job. Today, he mostly does real-estate wholesaling and brought in $1 million on five deals in 2022

While real estate may always be his bread and butter, he also invests in the stock market.

Baldwin prefers index funds that track several companies at once over picking individual stocks. He invests in Vanguard’s S&P 500 fund (VOO), according to documents viewed by Insider.

The self-made millionaire shared four investing principles that anyone can follow in 2023 to build wealth.

1. Invest in what you know

Baldwin’s top money advice is to “invest in what you understand,” he told Insider. For him, that means investing in real estate, which he’s been doing for about seven years.

Before you invest your money anywhere, think about how well you could explain that particular investment to a friend. If you can’t articulate why it’s a smart investment vehicle, consider doing more research before dipping your toe in.

2. Diversify 

One of the golden rules of investing, diversification involves owning a mix of assets. You want to spread your money into various investments (and various kinds of investments) in order to reduce risk. The idea is that, if one asset (or group of assets) underperforms, your portfolio will be protected if your other holdings do well. 

There are a couple of different ways you can be diversified. One, you can be diversified across asset classes (major asset classes include stocks, bonds, cash, property, commodities, and collectibles). For example, Baldwin doesn’t just own real estate; he also invests in the stock market via index funds (which, by the way, offer immediate diversification). 

You can also be diversified within asset classes. For example, if you’re investing in stocks, you don’t just want to put all of your money into one; after all, you could lose everything if that one company fails. Instead, consider investing in mutual funds and ETFs, which make it easy to invest in hundreds or thousands of stocks, bonds, or alternative investments at once.

As the age-old proverb goes, “don’t put all your eggs in one basket.”

3. Don’t confuse investing with saving

Saving and investing are two very different concepts — and, if you want to build actual wealth, you can’t just save your money, emphasized Baldwin. You have to put it to work. 

The more you can invest (and the sooner you can start), the better, but even a little bit can go a long way, thanks to compound interest

As for how to invest, remember to follow the first two principles. 

If you’ve never invested and have no idea where to start, an easy way to dip your toe into investing is to use an employer-sponsored retirement account, like a 401(k) or 403(b), if your company offers one. You can set up automatic contributions and have money sent straight from your paycheck to your retirement account, where it will grow over time. Your company might even match your contribution up to a certain amount.

4. Invest for the long term 

Abandon any thoughts of getting rich quick and invest for the long term, said Baldwin.

When it comes to investing in the stock market, “set it and forget it,” he said ​​— meaning, once you purchase an investment, like a mutual fund or ETF, keep it for a long period of time despite changes in the market. “Do not day trade,” he added.

This principle can also be applied to real estate investing.

“If you take your money and buy real estate, you’ll never make 30 times or even five times your money in one day. But you can bet that over time you will become a millionaire,” he said. Buying-and-holding property requires time and patience, “but it’s pretty straight-forward. If you just buy real estate and you hang on to it for 20 years, you’re going to sell it for a lot more than what you paid for it.”