Principles of Wealth and Success part 2

 

Wealth-And-Success

Wealth-And-Success

For this article we are going to discuss what is probably the single most important topic in the quest for financial success, and that would be the question “How are you going to build a net worth of over a million dollars or accomplish whatever your personal financial goals are. What path are you going to take to live your life on your terms?

There are many, many people advocating many different methods on how to make money or live free theories that it is easy for most people to get confused. Sometimes there seems to be an unlimited number of ideas for achieving wealth and or financial independence. And yet for most people none of them seems to be quite right.

The goal here is to try and focus on what it is you want; have or try to have a clear vision. The answers are easy to find when you ask the right questions. Instead of listening to all the different opinions on how to get rich or how to best invest your money try asking the right questions concerning your specific goals. Look at and try to study those people in the real world who actually became wealthy or rich. This will tell you how to go about gaining your goals of financial success.

Let’s begin by looking at the way to gain financial success that gets the most news coverage and attention in the United States. That would be the stock market. It is the money making method most covered on television and in the newspapers. It is the way to make money that gets the most attention in magazines and financial newsletters. The stock market gets more news coverage than every other way of making money put together. Judging by the publicity it gets surely this must be the number one best way to gain financial success in America today right? No, wrong, its not.

Ask yourself this question: Have you ever personally known anyone who started from scratch, saved some money to invest in the stock market, and then over a few years become wealthy? Have you ever known anyone who became a self-made millionaire by just investing in the stock market? Have you ever known anyone who after a few years of investing in the stock market was able to quit their job and live a rich lifestyle by just “playing the market?”

I have not. Of course, I have heard of many people who claim to have foolproof systems for getting rich in the stock market, but I have never met anyone who actually did it. And I have known a great and read about a great deal of self made millionaires and have done extensive research and studies on the subject.

There are certainly those people who get richer in the stock market. People have taken one million dollars and turned it into ten million dollars over a period of ten years. And of course, the insiders have made a lot of money with insider trades and hostile takeovers. But regular people in the real world do not normally become wealthy by playing some stock market system.

Unfortunately, everyone’s first choice for how they would like to acquire wealth is in the stock or commodities market. What most people would like to do to get wealthy would be to pick up the phone and make a couple of calls to their broker and say “buy 10,000 shares of XYZ at $20 dollars a share.” Then a few weeks later call the broker back and say ” I see XYZ is up $30 dollars. Go ahead and sell. I’ll take my $100,000 profit and move on to my next investment.”

That is a nice fantasy. This way of getting rich is so civilized. Not getting dirty at all. No hard work. No dealing with any business headaches. No products, no customers, no employees. Forget it. This is not how real people become rich and successful in the real world. There is nothing wrong with trying to get rich by sheer luck. Some people do it the million dollar lottery or win the million dollar jackpot in Atlantic City. So you could get real lucky and get rich playing the stock market. But it is not very likely.

If you truly want to gain financial success, you must take a more practical approach. The stock market and even the commodities market will have some use for investing for income or for speculating for profits after you have made a lot of money. These are places to put money after you have made a lot of it. They are not the places to try to get rich or financially independent.

How about the ways of getting rich where a salesman calls you on the phone and wants to let you in on the greatest opportunity of your life; an opportunity to get in on the ground floor new,

1) Oil Exploration operation.

2) Multi-Level distribution scheme.

3) Diamond Deals.

4) High profit mutual funds.

5) Exciting business opportunities.

6) Or whatever “come down the pike” money making schemes.

Thousands of people jump into these deals every year. Has anyone ever gotten rich by saying yes to one of these salesmen? Like Stan Lee from Marvel comics used to say “Nuff Said.” Case closed. No.

How do most people who get rich do it? The answer is they follow the same path as other people before them have taken to get rich. You don’t try to get rich by doing things that have never made anyone else rich. You try to get rich by doing things that have a proven track record for making a lot of other people rich. Most people try for financial success by doing things that don’t work and never have worked. That is why they fail.

Who gets rich? Copy cats get rich. Find out how so and so got wealthy or rich and do the same. Play copy cat, but try to stay original as well, and you will get rich.

Forget all the get rich theories. Look at how real people get rich in the real world and do the same.

(Note – Read the Millionaire next door)

So now let’s look at another possibility like your job. Do you see most people getting rich on their jobs? The most common answer would be no. Quite possibly there are some very rare exceptions. But as a general rule, even people who appear to be getting rich from their job don’t really have a job. Rich and famous actors for example are people who market their services for negotiated fees. You can’t really call this working at a job. The same is true of athletes, rock stars, etc.

A job is not the place to get rich. But do people use their jobs as a foundation for getting rich? Yes! Many people who get rich use their job as a starting point. How? They build up savings from money they earn on their job to invest in things that can make them rich. Of course, this should be obvious. Yet I point it out because few people act as if they understand this concept. Most people simply spend all the money they make. And a very small percentage of the population actually view their job as a stepping stone to the rich life.

For most people their job should be considered a foundation from which they will build their financial fortune. It will make sense for you to earn as much money as you can on your job and save as much of it as you can. The theory that it takes money to make money isn’t always true but there is a lot of truth in it. Having investment money is an important step towards financial success.

We have taken a good look at how not to build wealth, now let’s start looking at how people do start building wealth. I think now that you know the right question to ask you’ll know the right answer. How do people in America start creating wealth from scratch? Answer: in business and/or in real estate (real estate wealth).

Look at self made millionaires and those who practice wealth creation. How did they get rich? In 99 out of 100 cases the answer is in business and / or real estate.

If you are serious about financial success those are your choices, like it or not. And most people don’t like these choices. Maybe you don’t either. But at least now you know the truth. If you really want to be successful forget the fantasies and face the truth. Are things really that bad. No. Making money in business and real estate is not easy but its not impossible. Its just a matter of having a kick ass never say die attitude. It is a lot easier making money in your own business, or business system (once it is up and running), or in real estate than on a job. Let’s start with real estate. I have a friend who tells me how amazed he is at how many people for go real estate wealth because they are terrified of real estate investing.He goes on to say that this is an incredibly easy way to make money. Here’s how:

You buy a small piece of residential real estate. Anything from a single family house to a five unit apartment building. You turn it over to a professional property management firm to rent and manage for you. Along with the property management company, you too will be actively managing the property, but not as much due to the management tasks from the management company. Next your responsibility to the property is reduced giving you time to work other deals. When the property has appreciated in value enough you have a real estate agent sell it for you. Sounds rather simple.

You do need to learn how to completely invest in real estate and at times the manager will call you with a problem. But you never need to repair anything yourself. You will have minimal contact with your tenants. With this example, my friend is trying to illustrate how easy it is to make money in real estate. (Note: see www.johntreed.com)

Is real estate the easiest and best way to get rich? Yes and No.

A LITTLE HISTORY

During the 1970’s there was a very high inflation rate and real estate values were skyrocketing. Sometimes property would double in value in under three years. Skillful investors could start with nothing more than a decent credit rating and become a millionaire in three to five years.

It isn’t so easy today. However, more regular people have started from scratch and become millionaires through real estate than any other way. This will continue to be true. Over the last few years real estate has had an average appreciation of about 6% per year. At that rate even a very skillful investor might need 15 or 20 years to become a millionaire unless he was effective using some very creative techniques. But two points:

1) Becoming a millionaire in 20 years is better than working all your life and having nothing to show for it.

2) There is bound to be a return of higher inflation during certain periods of time which will speed up the process.

For people who want to become rich, real estate is one of the best choices. For those people who are willing to put out some effort, make some sacrifices and take some risks going into business is the most logical approach to wealth and getting rich. But even for them real estate investing should be an important part of building up their net worth. A large part of the money you make in business should be invested in real estate.

One of the best website to learn all you can about real estate investing is John T. Reeds website at http://www.johntreed.com/. Also, a great book to study is the Real Estate Investing For Dummies book. This book will help you get familiar with the basics of purchasing property and mortgage planning.

For people who are really serious about becoming wealthy, going into business is the answer.

(Note: to learn how to create a business system and not just a business, read The Millionaire Fastlane: Crack the Code to Wealth and Live Rich for a Lifetime by M.J. Demarco.)

Don’t be fooled because other get rich quick ideas sound good on the surface. If you really want to become a millionaire you are going to go into business. Some years ago I wasn’t so sure going into business was such a great idea for a couple of reasons:

1) there didn’t seem to be any clear cut, easy to follow plan for succeeding in business as there was with real estate. There were so many business opportunities and none of them had a simple “road map” formula that would practically guarantee success. Or so it seemed.

2) Business failure rates are incredibly high. About 50% of new businesses have failed within the first two years. And now I understand almost 80% of new businesses are gone in five years. Not very good odds.

Today I know going into business is a much better bet than it might seem. We are living in the most wonderful time in history due to the internet. Odds can be misleading. Consider automobile accident statistics. Many people get killed in car accidents. Do the general odds of dying in a car accident apply to you? If you take a close look at the numbers you would learn that half of all accidents involve someone drunk, or on drugs. Many other accidents involve someone driving when they are very tired. Or someone who is tailgating or allowing themselves to be tailgated. If you don’t do any of those things your chances of being in a serious accident go way down. Not risk free. But way down. What does this have to do with business? Most people who go into business are an accident waiting to happen. If you know what you are doing the odds for your success are very different.

When you know what you are doing there is no faster way to wealth than in your own business. You can succeed whether you buy into a franchise, buy an existing business or start your own business from scratch. In time you may do all three.

Let’s review the important points of this article.

1) Your job should be considered the foundation from which you will build your personal fortune. You should make and save as much as you possibly can to invest in your future.

2) The way to wealth is to be in business for yourself. Being in business is the way you will produce a high level of income for yourself and get money to invest in other areas.

3) Real estate is an important way to make money. You should invest in income producing real estate to build your net worth to higher and higher levels.

4) Stocks, bonds and commodity investments are not the vehicles to use to get rich but they will have use in diversifying your investments after you make money elsewhere.

I will go into more on this topic soon.

Until then,

God Bless you all.

Leon.