Real wealth creation is achieved by owning revenue streams that are under your control. Building wealth is a journey, and like most journeys, the sooner you start, the further you’ll go. There are several approaches to accumulating and creating wealth. A good money system and a profitable money multiplier will lead one into financial freedom.
Creation of a money system requires deep thinking, discipline, time, smart and money moves and all these is worth it. While you surely can trick someone into giving you their money, the easiest way to build wealth is by creating value for others, so instead of thinking ”Wealth Creation” you should think ”Value Creation”. That will give you the right mindset that you need to become really successful, because it shifts the focus from you to your customers.
If you want to increase your income, you should become a valuable asset. That will happen with self-improvement. Before you invest money to gain wealth, you need to first invest in yourself. Invest money and time. Self-belief is believing in your abilities and being confident about achieving success. This is extremely important. There are many strategies to create wealth from the ground up, however, none of them involve luck. They all call for focused and dedicated effort and hours of toil. Without believing that you can do it, these strategies may not be useful.
Be confident about your ability to put in the effort needed. Have a positive attitude that can help you when you come across obstacles. Building wealth from the ground up is possible, however you may encounter many obstacles in your way. Self-confidence and determination will help you to clear obstacles and achieve your goals.
Debt is one of the biggest obstacles towards building wealth, and if you’re in debt you’ve got to eliminate it. If you’re ready to begin your journey to financial independence, the first thing that you need is a realistic look at your current financial situation. Spend a couple of hours working out what you own (your assets) and what you owe (your liabilities). In a sense do a personal balance sheet so that you have a snapshot of your current financial wellbeing — or lack thereof.
Then start on your spending habits, check the last few months’ bank records and work out where you’re spending your money.
Your Net Worth:
Determining your net worth is fairly straightforward. You list and add up all your assets and all your liabilities. Then, you subtract your liabilities from your assets. Since determining your net worth is similar to taking a financial snapshot, you don’t consider your annual income.
What are your assets?
- – The market value of your owned home.
- – The money in your investment accounts such as mutual funds, etc
- – The amount you have in your checking and savings accounts, including CDs and money market accounts.
- – Notable items of value you own, such as artwork, furniture, fine jewelry, or collectibles.
Think about it this way: If you make $30,000 per year, but you have an investment portfolio worth $3.5 million, you’re going to be more concerned about your total net worth because the $30,000 salary you make is a very small part of your financial situation. To calculate your net worth, you need to add up all your assets and subtract your liabilities from the total (Net Worth = Assets – Liabilities). Here’s a little more detail.
Make a list of all your assets: This includes your house, car, savings, stocks, bonds, other investments, retirement accounts, property, etc. All of your savings accounts should be listed separately and added up together for a total.
Make a list of all your liabilities: This includes all your debts. Add up your mortgage, car loan, student loans, personal loans, medical debt, and any other debts you have. List them all out separately and add up the total. Subtract your liabilities from your assets: Subtract your liabilities from your assets. The total you get is your net worth.
Take risks: While saving and not overspending are good habits to have, they can become money mistakes if you don’t eventually put your money to work for you.
This is where you are going to have to be very strategic in trying to turn your rainy day savings into a stockpile you could retire on. Any great capitalist will tell you that the key to creating great wealth is being willing to take a risk. Invest in income-generating assets Investing in an income generating asset involves paying money now to acquire an asset or account with the intent of generating more income in the future. These assets are attractive because of their ability to generate consistent, stable income over time. such as:
- – Interest Paying Bonds.
- – Dividend Paying Stocks.
- – Single Family Rental Houses.
Any investment you make is going to be a risk. However, you can offset some of that risk by learning and gaining knowledge. “Risk comes from not knowing what you are doing” – Warren Buffett.
Regardless of when you begin to accumulate wealth, a successful plan will require:
- – A long-term investment strategy
- – A commitment to seeing that strategy through
A simple rule, the rule of 72, tells how long it takes your money to double if it is invested at compound interest. The number 72 divided by the interest rate gives the approximate number of years it will take to double your money. For example, at a 5 percent interest rate, it takes about fourteen years to double your money (72 ÷ 5 = 14.4), while at an interest rate of 10 percent, it takes about seven years.
There is a wonderful actual example of the power of compound interest. Upon his death in 1791, Benjamin Franklin left $5,000 to each of his favorite cities, Boston and Philadelphia. He stipulated that the money should be invested and not paid out for one hundred to two hundred years. At one hundred years, each city could withdraw $500,000; after two hundred years, they could withdraw the remainder. They did withdraw $500,000 in 1891; they invested the remainder and, in 1991, each city received approximately $20,000,000.