The Secret of Creating Wealth: It’s something everybody wants to know. So if you’re looking for the secret of creating wealth you’ll be happy to know you’ve come to the right spot. And to be honest…
The secret of creating wealth is easier than you think. Believe it or not, there are only a couple fundamental principals that underpin all wealth creation. Sure, they have been expressed in millions of different ways over the past thousands of years. But the basics are the same. So..
In this blog post we’ll cover the boring secrets of creating wealth. And then I’ll share how you can super-charge your wealth creation…
The Secret of Creating Wealth: The Boring Truth
The secret of creating wealth is actually really simple. You just need to save 10% or more of what you make. That’s it. Spend less than you earn. It’s the foundation of every classic personal finance book. This is step 1. There is no way around it. Hopefully you’re long past that point.
But if you’re still stumbling at the starting blocks with the first step of wealth creation, don’t give up! Check out The Richest Man in Babylon to gt up to speed on the personal finance basics. It’s a great book that’s easy to read. And it will definitely get you started on the path to wealth creation. But don’t get too excited yet.
If you really want to dip deep into the secret of creating wealth, the real truth of how fortunes are built is even more boring. Let me show you what I mean. I promise I’ll be quick.
The Secret of Creating Wealth: The Even More Boring Truth
Now let’s look a little deeper into the secret of creating wealth – spending less than you make. See, if you want to get academic about it, the secret of creating wealth is really about cash flow accounting. See where I’m going with this?
Just as businesses create earnings for shareholders by diligently building cash flow streams, so should you. Just as businesses trim unnecessary expenses to keep earnings positive, so should you. Your life is like a mini business! Do you see what I mean? Well…
Here’s where the secret of creating wealth gets exciting:
There are basically two ways to manage your personal accounting. You can reduce expenses, and you can increase income. Most people focus on cutting their expenses. But there is only so much money you can save – and hey, life is also worth living right? What’s the point if you can’t enjoy yourself every once in awhile.
So the point is…
A big part to the secret of creating wealth that is often overlooked is growing your own earnings. Just like businesses can invest in themselves, so can you. Invest in skills, education and experience. If you think like a business and focus on how you can grow your earnings streams you will really start to cash in on the secret of creating wealth. You see…
While cutting expenses has limited potential, there is basically no upside to what you can earn. And there are thousands of ways to do it. When you grow your personal earnings you can turbo charge your wealth creation by saving significant amounts of money. And that’s when wealth creation goes from plain and simple to a little more exciting. The key idea is…
Don’t trade your time for money. While that’s good for a stable income you will never get really wealthy that way. Common ways of getting around this little hurdle are: working in sales/on commission or starting a business. There is no end to the way you can increase your income. And when you do that, things really get exciting…
The Secret to Super-Charging Your Wealth Creation:
At this point we’ve covered the basics of wealth creation: Make a habit to save some money each month. We’ve also dug a bit deeper to uncover the next step in wealth creation: Grow your income so you can save large amounts of money each month without compromising your lifestyle. Now here’s the cool part.
When you start to save meaningful amounts of money, you can start to earn asset income. This might be in the form of capital gains, dividends or even rent payment on a house you own. Asset income really gets exciting
If you’re interested in responsible asset management, now that you’ve saved up a significant amount of money, you’ve come to the right place. StockIdeas.org is all about this step of the wealth creation process. So what do I recommend for you?
- If you’re new to saving money, check out investment strategies for young adults, or how to invest $5,000.00.
- If you’re past the beginner stage and want to get serious, check out The Intelligent Investor. This describes the framework we advocate here at StockIdeas.org
- Develop a methodology to analyze the value of investments that makes sense with your own personal experiences and interests. It’ll take a lot of reading and a lot of experimentation. Here are some investing books to get you started.
- Refine your thoughts into a simple trading plan. This should have two main parts (a) you need a methodology to find investing ideas and (b) some rules for when you will buy and sell (e.g. how to implement your ideas).
- Just start doing it. If you’re new, you can practice first with a stock market simulator. Otherwise, find a source of premium stock picks and start practicing. Be sure to limit your risk
So now that you’ve read all this, I hope you feel like the secret of creating wealth is a little closer. How you apply the principals above will really be up to you, and should reflect your personality, expertise and interest. Now let me as you…
What’s your Secret of Creating Wealth?