Creating Wealth - 7 Insider Secrets Of Wealth Creation
Rarely will people be interested in creating wealth purely for the sake of having it. Frequently, it's because they want a cushion of prosperity so they don't have to worry about making ends meet. Some people want to build up their net worth in order to be assured of a comfortable retirement later in life whilst others simply want to be able to provide for their children's expensive education! Whatever the reason, this article shows you the 7 things you need to know to be successfully creating wealth in your life.
1. Define What "Wealth Creation" Means To You
When you think about creating wealth in your life, you need to consider what it is that you are trying to achieve. Are you talking about having money or are you talking about acquiring assets and building net worth? If it's money, how much money do you want and when? Really, wealth creation is focused on building net worth through the leveraging of capital. Assets minus liabilities (debt) equals net worth. Most wealthy people don't have piles of money sitting around in bank accounts. They are in fact often asset rich, cash poor! They have capital assets such as companies, real estate, stocks etc., working for them, building capital.
2. Don't Try to Earn Your Way to Wealth
Millions and millions of people dream of being wealthy... but show up for their 9-5 jobs and wonder why they aren't getting wealthier. Creating wealth doesn't happen by working harder, longer, faster. Sure, you kinda have to work hard to get to the point where you're rich enough not to have to work hard. But the truth is, you will never create wealth by holding down a 9-5 job alone. You cannot earn your way to wealth. You will eventually burn out from working too hard. The greatest wealth gets made from a capital base and is not "earned". Outside of your day job you can focus on building net worth by putting aside money you have earned and use it as capital so that it now works for you!
3. Learn How to Leverage Time, Talent & Money
Creating wealth requires capital and leverage. If you don't have the money then you need to use your talents to persuade the bank to lend you some. Money becomes capital once it is used for investment purposes. Creating wealth will require entrepreneurial spirit and talent to create something of value in the marketplace. This could be a profitable business or a real estate portfolio. One important wealth creation ingredient is to ensure you are also building opportunity for others along the way. This is the secret ingredient that will help you become enormously successful and create massive wealth.
4. Build a Winning Team around You
No man is an island. You simply cannot create wealth in isolation. Whether you are selling products or proving a service you eventually will need a team of people around you to deliver on your business plan. Only work with people you like, respect and trust. This principle goes for employees, professional advisors and even clients or customers and works both ways. If you don't like the people around you, you might need to start taking a look at yourself and correct some of your own shortcomings in order attract the right kind of people into your business and personal life.
5. Be Willing to Invest and Take Calculated Risks
Creating wealth requires you to make investments and do so with levels of risk ranging from low to high. Decide on your risk level and only make investments you are in the main comfortable with. For many brand-new entrepreneurs who dream of creating wealth but have never started a business before or invested, stepping outside their normal comfort zone can be difficult. However, creating wealth will require an investment on your part. It's the idea that you have to invest money in order to make money. Investing carries a certain level of risk and you need to decide upon your risk tolerance depending on your personality type and your stage in life. You can choose to invest in low-risk assets that yield less but at least you can sleep easy at night.
6. Know When to Borrow Money
Only borrow money for things that are 1.Likely to increase in value and above inflation over the medium term and; 2.Cover the cost of the debt funding while the debt is in place. So if you are buying an investment property make sure the rental income covers the cost of the mortgage as well as maintenance, costs and other fees. Borrowing money to buy a brand new car is a really bad idea...the interest rates are high and the car loses about 15% in value the moment you drive it off the forecourt!
7. Play Your Own Game
Whilst it can be useful to listen to peoples views, when it comes to investment it can often be wise to find out what everyone else is doing and do the exact opposite. Most successful people are contrarian in their thinking. If everyone, including the local postman or cab driver is buying property in a certain location and prices have risen to an all-time high... it may be a good time to consider selling. During a recession most businesses reduce their advertising and marketing spend. However, this is the time when you can negotiate the best deals and make the most impact in the marketplace. When investing, do your own independent research, learn to take what you hear and read with a pinch of salt and always crunch the numbers before handing over your hard-earned money!
by: Keeks Cunningham