Tips to becoming wealthy: The value of planning, long-term
There is a huge misconception in society today: the idea that, in order to become wealthy, you must first have a wildly high-paying job.
Unless one invests and cultivates their finances well, the reality is a six-figure salary will only go so far.
People, regardless of their wage, tend to always live beyond their means.
Still, we live by the equation that a six-figure salary = a two story house, with a pool and a spa, and a car and a boat and a family holiday at the end of each school term. (Sound’s great, right?)
It doesn’t take long for these ‘wealthy’ people to be living off borrowed money.
Wealth is the equation: Assets minus Debt = NET worth. And our net worth is able to be increased purely through valuable investments, regardless of our wage.
Time-and-time again we see people come into wealth in ways that defy the status quo because they invested with whatever they had.
While the stock market, business and entrepreneurial ideas have avenues to becoming wealthy, ninety percent of the world’s millionaires became wealthy through property investment.
It may also be interesting to note that this ninety percent of wealthy people only make up 1% of the population. Does that mean becoming wealthy must be hard? The truth is, it’s not. You don’t have to start rich to get rich and you don’t have to have any great deal of knowledge.
The first principals of being a successful investor are attitude and choices.
Ignore the Global financial crisis; economist’s blaring that it’s a bad time to buy and that we are on the brink of a market crash. When we hear this information, negativity is a valid mindset, but it isn’t to those who are willing to take a chance.
But the rich die rich and the poor die poorer. . .
There is one reason for this; choices. It simply comes down to our attitude towards what being rich looks like. The rich will cleverly invest their finances while the poor will spend it on expensive items to look richer (and as said before, eventually live off borrowed money, keeping them poor.) The wisest choice to make is aim to become rich through long-term-investments. Something that may not give the perception of wealth now, but you’ll be thankful for when it comes to retiring.
Sounds easy? So why is only one percent of the population doing it?
Here’s two scenario’s – think about which you would choose.
|A.1. You get a job and start saving.2. You save a deposit for a house.3. You end up borrowing the money for your own house.4. You pay off your small home and borrow against the equity to buy and investment property.5. Your borrow against the equity of your investment property and buy another investment property and continue to repeat this method.YOU RETIRE|
And sell some of the properties to reduce the debt. You then live off the rent of your investment properties and sell a property to travel or buy a motor-home.B.1.You get a job and start saving.2. You save a small deposit for a large house.3. You borrow money for luxuries such as cars and holidays.4. You spend the rest of your working years trying to pay off your large home.5. You save a small superannuation.YOU RETIRE
And live off the pension (soon to be phased out.)
If you chose to live by box A. you could find yourself living in that 1%, or at least, retiring very comfortably. B? Well, you sure ‘looked’ rich at one point in your life.
Article by James Parnwell & Jordan Cox
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