Wondering Why You Are Not Getting Rich Quickly

The one thing I have learned, when it comes to building wealth, is the fact that there are no short cuts to instant riches. While there have been a few high profile incidents of extreme wealth being created almost overnight, as in the case of Google and a few other "instant" successes, even in these cases there has been huge risk and extensive capital expended in order to create the wealth. In fact the most important factors which lead to success in business are the willingness to assume risk, willingness to expend capital, the ability to focus on an idea and bring it to fruition and some good old fashioned luck.

 

While I'll be the first to recognize there are some people who just seem to stumble into a situation and are in the right place at the right time, or that some folks will win the lottery, sell a stock at just the right time, or buy and sell real estate for a quick profit, most people who have built wealth have done so over time. Furthermore, they approach investing with a disciplined plan and the relentless pursuit of their dream. I will focus the rest of this article on the people who build wealth through a disciplined approach. Following this model is more likely to lead to the desired goal of financial security.

 

Many people wish to own their own business and be an entrepreneur, but many of us don't have the "brainstorm idea" which leads to a blockbuster business, or one that totally changes the dynamics of a business model. Luckily, this is not necessary in order to succeed as an entrepreneur. While it would be nice to come up with one of these blockbuster ideas, there are plenty of other ways to become the owner of your own business. Purchasing an existing business is one such way to join the ranks of the business world. There are individual businesses and franchises which can be purchased outright, or financed by various means. This is usually an expensive endeavour, and usually requires leaving your full time job in order to manage the business. This also involves a degree of risk, but if you do your homework, and devote the time it takes to manage the leverage of the purchase price, plus the day to day operations, it can be an excellent way to build long term wealth.

 

If the idea of owning a business while maintaining a full time job is more your cup of tea, there are many business models which can facilitate this. Again, there is no free ride, because nobody is going to provide you with all of the tools to run a profitable business, without some cost. Unless you are strictly interested in doing a specific task at home for a fee, most of the business models I've reviewed for an at home or online business require money to be spent for hosting a site, joining affiliates and marketing. These are reasonable expectations when you utilize an existing franchise, or affiliate program. Developing multiple streams of income is very desirable and can be achieved by developing a home business along with your full time job. While your goal may be to eventually quit your full time employment, or augment retirement, developing an online or home business can be a rewarding way to be an entrepreneur.

 

So, if getting rich quickly is your main goal, then there is a good possibility you will continue to go from one "cocktail party conversation" trend to another, such as day trading or real estate flipping. We all know where those bubbles have led. This is the equivalent of gambling, and while I know full well sometimes people do quite well gambling, I don't recommend it as an investment technique. If building real wealth is your goal, then developing streams of income and systematically investing in diversified assets will lead to ever increasing equity and financial security. One day you'll look at your portfolio of investments and realize you've built wealth faster than you thought you would.

 

Wealth Building: An Advantage of Home Ownership

As you grow older, the issue of wealth building comes front and center. Wealth building simply refers to increasing the net value of your total assets. Wealth building over time is one of the advantages of home ownership.

 

Building Equity

 

Owning a home can help you build wealth in two ways. First, you build equity by paying down your mortgage. A certain percentage of each mortgage payment goes towards a reduction in the total amount owed. Typically, payments in the first few years of the mortgage are primarily applied to interest on the loans. As time passes, however, more and more of each payment is applied to the outstanding loan amount. Before you know it, the $300,000 loan is down to $50,000 and you’ve gained $250,000 in wealth.

 

Appreciation is the second wealth building advantage to home ownership. Each year, the value of your home will increase or decrease slightly based on market prices. Over time, real estate has always appreciated in value. In the current market, homes in some parts of the country are appreciating at rates as high as fifteen to twenty percent! Appreciation is a very popular subject with homeowners.

 

Wealth Building Example

 

Let’s look at a simple demonstration of how advantageous home ownership can be. Assume you buy a home in 2005 for $400,000 and, for the purpose of simply mathematics, pay no down. Over the next 10 years, your mortgage payments reduce the outstanding mortgage by $100,000 and the home increases in value to $600,000. The value of your home as a net asset has grown to $300,000 [$600,000 minus $300,000]! If you had rented during this period, you would have missed out on $300,000 in wealth. This simple example should show you the advantage of home ownership.

 

Historically, home ownership is one the best ways for families to build wealth. If you don’t currently own a home, you should start looking for one.

 

Wealth Management Solutions: Options Abound

Wealth management is a difficult concept to grasp for many people, especially in terms of investment and savings for the future. With options like stocks, bonds, 401K’s, 529’s, and more, choosing the right wealth management option can be tough at best and impossibly confusing in many circumstances. That’s why there are wealth management firms who are experts in these services and exist solely to help guide high net worth individuals through the aches and pains of wealth management and private banking, as well as educating people on where to put their money and how each investment will help their finances grow.

 

Private Banking

 

If you are interested in learning more about the various ways to invest your money or plan for retirement, you should perhaps look into private banking options. In private banking, you have a direct account manager that you can contact any time with any questions regarding your account and how your assets are being handled. There are many options for investment through private banking, and most are fairly simple to understand, making this a preferred option for many individuals who are unfamiliar with wealth management.

 

Wealth Management Services

 

For those who don’t quite understand the concept behind wealth management services are available from a number of avenues to assist in the determination of how to handle finances. Wealth management means more than sticking to a budget; it also means planning for the future, and various institutions can assist in teaching individuals how to manage their money, as well as in providing complete wealth management services.

 

Wealth Management Firms

 

Have you considered a wealth management firm? You’ve spoken to private bankers and don’t like the options they provide for wealth management. You aren’t a fan of computers, so you don’t want to invest in wealth management software. However, you need a customized solution for your assets to build at a greater rate, and you have no idea where to invest. Wealth management firms are built on the basis of helping you to follow the right avenue. With a personal advisor, you’ll be able to configure your investment options to achieve your specific goals with as much or as little input as you feel is necessary.

 

Wealth Management Software

 

You may also consider the benefits of wealth management software. Many people have a hard time managing their finances enough to plan from pay check to pay check, much less to have a goal for the future. When it comes to wealth management, most people are completely flustered by the thought of having a budget that considers not only the groceries to buy tomorrow, but also the ones you’ll need to buy after retirement in 40 years. Wealth management software is a helpful tool in building your financial plans so that you can feel comfortable with your current lifestyle, be assured that you’ll have the assets you need in the future, and can fulfil some of your dreams in the interim.

 

The Ultimate Wealth Building System

Most people search for the ultimate wealth building system for most of their lives. It may surprise you to know that you own half of it the day you are born.

 

What half do you own? It’s your ability to make money. No matter what your education level or skill level, you have income earning power. Want to hear the good news about that and how it connects you to the ultimate wealth building system?

 

It’s not how much you make; it’s what you do with it that determines your financial condition.

 

The second half of the ultimate wealth building system is what you do with the money that you earn. There is a system to controlling the flow of money to create wealth. Very rich people know this system. It works whether you are an employee who works for someone else and you are using the system to control the flow of your personal income, or if you are a business owner using the system to control the flow of the company’s income. It is an amazingly simple system.

 

1) SPEND LESS THAN YOU MAKE - Cut your expenses back to operate within your income.

 

2) PUT 10% OF YOUR INCOME AWAY IN SAVINGS and don’t ever spend it. Set aside regular amounts of cash from your income for the future - always pay yourself first and put the money in savings toward gaining financial freedom. The ultimate wealth building system requires a minimum of 10% of income into savings out of every dime you earn. Just sock it away and forget you even have it. As it builds up, move it to places that earn better interest than the bank savings accounts. This includes buying houses and commercial buildings you can rent out to make more money.

 

3) DO NOT BUY ON CREDIT - pay cash instead. Debt is a disease that you should avoid contracting. Figure out what you want to buy and put money away towards the purchase every week until you have the cash. For large purchases like cars, furniture and equipment, buy used instead of brand new. Remember, those items lose value from the moment you buy them.

 

4) FIND WAYS TO MAKE MORE MONEY - the personal cost of living goes up about 3.5% every year, so you need to make more money just to keep up. If you work for someone else, increase your value to the company by taking on more responsibility and learning to do more; then ask for a raise. Be willing to work a second job if you have to in order to get out of debt and start putting money away.

 

If you own a business, look over your line of products and services and figure out how to sell more of the profitable items. Be willing to discontinue items that are not bringing in enough profit for the time, effort and cost to sell them. The secret to making more money is pretty simple if you put your attention on it.

 

5) USE YOUR MONEY TO INCREASE YOUR INCOME - After paying your ultimate wealth building system the 10% into savings and paying your bills, use any money left over in ways that increase your ability to produce more income.

 

Why is controlling the flow of money so important? It is the energy and life blood of a business or household. It is necessary to pump it through the income producing areas first to keep it running well. Everything runs smoother when cash is available.

 

Seems simple, right? And it is simple. The ultimate wealth building system is easily learned, and can be used to gain your financial freedom. It does, however, take personal discipline and commitment to achieve the goal of financial independence so you never have to worry about money again.

 

The really great news is that you have control over this system. Done correctly and consistently, the end result is always having lots of cash on hand, all bills paid, and plenty of money in reserves to finance what you really want to do with your money; not just pay bills. How well you control the flow of your money will determine how well your company or family will survive now and into the future. Correctly applying these five steps will make this wealth building system work for you.

 

The Two Biggest Thieves In Regards To Wealth Building

The two biggest wealth thieves a person will encounter are tax deductions and lawsuits. Taxes work against you by chipping away at your wealth. These include federal income taxes (deducting up to 39% of your income), state taxes (deducting up to 9.6%), and self-employment or social security (over 15.5 %.). The average American is paying 42-55% in taxes. Ironically, the wealthiest people in the U.S. are paying only single digits taxes. Rest assured, because there is something you can do about this, and it won’t cost you the $500/hr that these wealthy people are paying for tax tips from their specialists.

 

Next, lawsuits are the other evil. This is not the slow reduction of your wealth as with taxes. It is the sudden confiscation of the money you worked hard to build. You can literally fall from the top of the totem pole to the bottom of the barrel overnight. I believe there are no winners in lawsuits because even ‘winning’ a lawsuit takes up time and money that will set you back. Once again, you can protect yourself by learning how to structure yourself properly. You can "bullet-proof" your assets. You can even avoid lawsuits all together.

 

Crucial to understanding these strategies is differentiating the concepts of asset and liability. Ask yourself the following: Is a real estate investment an asset or a liability? You may be thinking, ‘It generates income and provides equity; therefore, it has to be an asset.

 

However, the answer is more complex. You must look at how you hold title to that property. If you own it incorrectly and are not properly structured, you could be putting yourself at risk. If you have your home, your car, your bank accounts all lumped together, someone can take them all away in one sweep. Therefore, you must learn how entity structure.