- The truth is that you can study hard, get into a good school and graduate into a high-paying job without ever seeing financial growth, because you’re still stuck in the ‘rat race’. Your bosses-not you-are getting rich from all your hard work. Following the stereotypical mantra-‘Go to school, study hard, get a good job’- we may be avoiding poverty, but we’re certainly not growing any wealthier. Fear of society’s disapproval prevents us from leaving the ‘rat race’ and growing wealthy.
- Fear and greed can drive financially ignorant people to make irrational decisions. The fear of losing money is so powerful it prevents you from investing in stocks or other assets because of the perceived risks, even though such investments would bring you wealth in the long term. At the same time, greed inspires you to spend your increased salary on a better life style, e.g. buying a bigger house, which seems a much more real and safer option than buying shares in a company. However, this upgrade also means a bigger mortgage and higher utility bills, which effectively negates your raise.This is how fear and greed hinder the financially ignorant from becoming wealthy in the long term.
- We are raised without financial intelligence education. Our school systems are set up to train people in a variety of subjects, but financial intelligence is not one of them. One good approach to shift focus: work for what you learn, not what you earn.You can also improve your finance education in your spare time. Enrolling in finance classes, read books and network with experts.
- To become wealthy, you must learn to take risks. Instead of playing it safe, try investing your money in stocks or bonds. While these are considered more risky than typical bank accounts, they have the chance of generating much more wealth. Or if you don’t want to commit yourself to the stock market, other investments: real estate, or so-called tax lien certificates. The higher the potential for return, the higher the risk.
- The road to wealth is long, so you must keep yourself motivated.
- Laziness and arrogance can drive even financially knowledgeable people to poverty.
- Only invest in assets, which put money in your pocket; and avoid liabilities, which take money out. Assets include businesses, stocks, bonds, mutual funds, income-generating real estate, IOU notes, royalties from intellectually property, with value that produces income, appreciates over time, and can be sold readily. When you invest in assets, your dollars become employees working to create income for you.
- It is wrong to consider your profession and your business to be one. Your profession allows you to pay bills and cover other living costs. Your business, is what you invest time and money into help grow your assets. Because a profession only covers your expenses, it’s unlikely that this alone will make you wealthy. To achieve wealth, you must build a business while working at your profession. For example, apart from a person’s profession, she invests in a business: real estate. Whatever extra money she has each month, she puts towards buying income-producing assets-apartments and condos she can rent to tenants or invests each month’s leftover income into stock trading. It’s wise to keep your day job until your business starts to show sustainable growth. When it starts to happen, your assets become your main source of income-the sign of financial independence. Your profession pays the bills, but your business is what will make you wealthy.
- Understand the tax code to help you minimises your taxes. Most people don’t bother to find out how they can minimise the taxes they pay. One way to reduce taxation is to invest your money through the coverage of a corporation-money is taxed more leniently than if you invest in your own name. It is just a matter of educating yourself on the many loopholes and benefits of the tax system. By becoming aware of how the ‘system’ works in your country, you may be able to legally reduce how much money the government takes from you.
- In the end, what you invest in your mind is what brings you success, because your mind is your most important asset in any financial situation. Researching to find the best books on your area of interests. (e.g. real estate, or the stock market.).
The GillPower 