Who doesn't dream of marching into their boss' office one day and resigning without caring about the financial repercussions? Well, you can only do so if you have acquired sufficient assets (wealth) through which you can generate a future income to replace your current earned income. By the way, as a rule of thumb I don't recommend you hand in your resignation unless you have at least 1 and ideally 2 years living expenses put away in liquid assets. Simply put, to become wealthy over time you basically need to make, save and invest money wisely. The smarter you are at doing this the faster you become wealthy. Assuming you've read my other articles on How to Get Rich (the making of and management of money) then you are ready to look at the 3 most common wealth building strategies of the super wealthy.
Investing in "paper assets" is a great way to start building wealth. It teaches you the principals of money management, capital, rates of returns, risk etc. You can invest in stocks, bonds, mutual funds, commodities, and foreign exchange ("Forex"). Each of these options presents various levels of risk and reward and requires thorough research before you start. You don't necessarily have to read the Wall Street Journal daily or subscribe to Fortune magazine in order to be a good stock investor. But you should at least get trained by an expert or have access to wholly independent financial advice from an experienced investor.
Some people boast as to how much money they made from some venture, this makes others feel bad, that they did not get the piece of the pie. Wealth is energy, people will either vibrate with it or not. You can build your own empire, provided that you have the end in mind. You want a million dollar lifestyle then you must build it. How? There is only one way and that is to keep the main thing (your business) the main thing (not be distracted by other things or claims).
Real estate is another great way to build wealth. With real estate, you typically buy a property and then make money through selling it eventually for a much higher value than its purchase price and/or becoming a landlord and letting the property. One of the advantages of real estate investing is using the principle of leverage (i.e. a mortgage) to buy an asset that you otherwise couldn't afford. Leverage isn't commonly available in paper assets investing (although you can buy on margin but this can be risky if you don't know what you're doing!).
In addition to seeking out high-performing assets, a fundamental rethink on how you build your wealth may be required. It may mean employing wealth building strategies that were put off during boom times. Perhaps becoming financially literate should be a key objective right now. Rather than placing all your chips on high-performing stocks or property maybe you need to earn your right to invest and build up a solid foundation of cash or cash-equivalents (e.g. money market accounts, certificates of deposit etc) and bonds first. It's recommended that at least 10% of your investment portfolio should be in cash or cash-equivalents at all times. This ensures you remain liquid so that a. You have funds to handle any financial circumstances ahead and b. You have funds to readily avail of possible investment opportunities. I think that many of us were guilty of some fundamental wealth building blunder by being over invested in real estate and stocks without first having a solid base of cash, cash equivalents and bonds. Now is the time to re-adjust this imbalance.
Wealth building is a process, it starts with you. You can start on a shoe string or have enough financing to get a large leap into the business you have chosen. The other part of the wealth building process is the management of income that is earned by your efforts. This revenue should do 2 things, one is for paying your basic business expenses and the other is for building the wealth portion of your life. This is inclusive of obtaining income producing long term equity assets such as real estate, oil leases other business investments. There are two other considerations, your current lifestyle and the overall marketing and business strategies.
Investing in "paper assets" is a great way to start building wealth. It teaches you the principals of money management, capital, rates of returns, risk etc. You can invest in stocks, bonds, mutual funds, commodities, and foreign exchange ("Forex"). Each of these options presents various levels of risk and reward and requires thorough research before you start. You don't necessarily have to read the Wall Street Journal daily or subscribe to Fortune magazine in order to be a good stock investor. But you should at least get trained by an expert or have access to wholly independent financial advice from an experienced investor.
Some people boast as to how much money they made from some venture, this makes others feel bad, that they did not get the piece of the pie. Wealth is energy, people will either vibrate with it or not. You can build your own empire, provided that you have the end in mind. You want a million dollar lifestyle then you must build it. How? There is only one way and that is to keep the main thing (your business) the main thing (not be distracted by other things or claims).
Real estate is another great way to build wealth. With real estate, you typically buy a property and then make money through selling it eventually for a much higher value than its purchase price and/or becoming a landlord and letting the property. One of the advantages of real estate investing is using the principle of leverage (i.e. a mortgage) to buy an asset that you otherwise couldn't afford. Leverage isn't commonly available in paper assets investing (although you can buy on margin but this can be risky if you don't know what you're doing!).
In addition to seeking out high-performing assets, a fundamental rethink on how you build your wealth may be required. It may mean employing wealth building strategies that were put off during boom times. Perhaps becoming financially literate should be a key objective right now. Rather than placing all your chips on high-performing stocks or property maybe you need to earn your right to invest and build up a solid foundation of cash or cash-equivalents (e.g. money market accounts, certificates of deposit etc) and bonds first. It's recommended that at least 10% of your investment portfolio should be in cash or cash-equivalents at all times. This ensures you remain liquid so that a. You have funds to handle any financial circumstances ahead and b. You have funds to readily avail of possible investment opportunities. I think that many of us were guilty of some fundamental wealth building blunder by being over invested in real estate and stocks without first having a solid base of cash, cash equivalents and bonds. Now is the time to re-adjust this imbalance.
Wealth building is a process, it starts with you. You can start on a shoe string or have enough financing to get a large leap into the business you have chosen. The other part of the wealth building process is the management of income that is earned by your efforts. This revenue should do 2 things, one is for paying your basic business expenses and the other is for building the wealth portion of your life. This is inclusive of obtaining income producing long term equity assets such as real estate, oil leases other business investments. There are two other considerations, your current lifestyle and the overall marketing and business strategies.
About the Author:
Frank Miller has a Debt Consolidation Blog & Finance, these are some of the articles: Tips Which Will Help You Survive Private Insolvency You have full permission to reprint this article provided this box is kept unchanged.
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