Four Steps To Wealth Creation

Even in this economy, wealth creation is possible. No matter how hard times are, you have the ability to create your own wealth. Tap into financial abundance by following the four steps below.

Spend Less Than You Earn

The easiest and simplest way to spend less than you earn is by paying yourself first – even when you are short. Simplify your life, reduce your living expenses and pay yourself first and let the creditors yell if you are short. They will inspire you to go out and create more money. As long as you continue living paycheck to paycheck, you will never create wealth. In the past, we have missed out on many wealth creation opportunities because we did not have any funds available to participate in them. So as you can see, spending less than you earn is critical.

Get Your Money Working For You

Usually this entails investing your money into financial instruments, such as stocks, bonds, or mutual funds. With the exception of money market funds for short term savings, we don’t mind telling you that we are not fans of these traditional investment instruments. In our opinion, they are at the bottom of the investment food chain which makes them the riskiest of investments.

Personally we prefer investments where we have more control. The trade-off of having more control means that you are usually more involved in managing your investments, thus reducing the “passive” nature of them. However, we feel it’s a fair trade-off considering the following:

• The lack of transparency of publicly-traded companies where you never know what could be going behind the scenes or how the books have been cooked (example Enron).

• How billions of dollars in sub-prime mortgages were being hawked as AAA securities.

• How mutual fund companies get paid whether they make money for you or not and the significant impact those fees have in reducing your returns over time.

• Your financial advisor is most likely either: a) not wealthy or b) only wealthy by earning trailing commissions on the money you’ve invested with them – whether you make money or not. In fact, even after completing the securities course to obtain my mutual fund license, picking a good mutual fund was still a shot in the dark. Even if you did find one that had a good fund manager, the managers quite often left on a regular basis. Meanwhile, my clients would be penalized if they pulled their money out within the first 5 to 7 years.

• The well-known factual experiments that were conducted several times by having monkeys randomly throw darts at a mutual funds list and invest in those funds, where they ended up outperforming the index every time! (Something that makes you go “Hmmm…”)

So where do you go to get your money working for you then? Personally we like the Forex Market and private investments. While these are not without risk, we feel that we have more control and there are usually fewer fees. Regardless of where you invest your money, you must still take responsibility and become educated and informed in the instruments that you are investing in. It is usually the investor that is risky, not necessarily the investments.

Invest In Real Estate

The biggest part of our wealth creation thus far, has been in real estate. And yes, despite the sub-prime crisis happening right now, there are still opportunities for wealth creation in real estate. In fact, if you take a closer look, you`ll see that it has created new opportunities. One example is in the multi-family market, such as apartment buildings. If you`ve got some cash on hand you can pick up great deals on rental properties for yourself. Even people who have lost their homes to foreclosure need a place to live. Where do you think they are going to go?

Furthermore, North America does not comprise the entire real estate market and there are other countries where real estate is booming. For example, mortgages never used to exist in Brazil and the economy there is not as reliant on the US like many other countries. Consequently, the real estate market is booming there.

Have A Business Working For You

Having a business working for you is an important step in wealth creation because it creates a passive stream of income, and it would take a large lump sum of money in an investment to create the same amount of income. For example, if you have a business that generated $5000 per month in net income, you would need to have $600,000 in an investment earning 10% per year, to generate that same amount per month.

Take note, we said, “Have a business working for you.” We did not say, “Own a job.” You want to invest in or create businesses that will run without you. This is one of the reasons why we are so fond of Internet-based businesses. While they do require work upfront, they are easy to automate using software, and outsource the areas that cannot be automated.

Online businesses are not the only strategy for wealth creation. The following are a few examples of ways you can earn passive or residual income:

• Network Marketing.

• Royalties on books, tapes, etc.

• Franchising your own business.

• Licensing fees on software.

• Coin-operated or Vending businesses.

• Brokering/finders’ fees for putting deals together.

By following these steps, you can be well on your way to creating wealth and achieving financial freedom, rather than living from paycheck to paycheck and relying on everyone else to pay you. Implement your own wealth creation, and live your life the way you want to.

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