What is the Secret to creating wealth? Well, if you do a quick google search asking just that, there are numerous authors who have written books on the subject, all promising to share the “secret” to building wealth. I’ll save you some time and money. There is no secret. Let me explain…
About five years ago, I started to notice that I was gaining weight. I was extremely surprised, because nothing had really changed in my lifestyle. I ate the same (frequently) and worked out the same (rarely). What was happening?? I was told that my metabolism was changing. If I wanted to stay at a certain weight range, I would have to eat differently.
So I made a few changes, but still loved an “occasional” tasty bacon cheeseburger, with fries and a Dr. Pepper… so let’s say that I was able to “slow the grow,” but I still gained weight. I began reading about weight loss programs. Wow, there are a lot of ideas, but almost all of them had the same theme. There is no secret to weight loss; it is a balance between healthy diet and exercise.
Wealth creation is just as simple. It is not a secret. It is the balance of three things:
Simple? Yes. Easy? No. But don't worry... I know a guy who can help. :)
The good news is that the majority of us are already earning money as normal part of our lives. So box one is checked. Good job! (Pun intended.)
So let’s jump to number three, investing. People find it intriguing, so they like to talk about investing, but investing with reasonable returns has the least impact in this equation. The most important part is the amount you save. The amount you save even trumps the amount you earn!
Self-Sabotage
People tend be under two delusions that keep them from creating true wealth:
1. I need to save more, so I can just earn more money to save.
False! Most people who earn more just spend more! Not convinced? How many people do you know who earn bonuses but count on them — and spend them — like they are salary? (That’s another post for another day, but you get my point.)
2. If I just take this little bit of savings, and I find the right investment, or the right advisor!, then I can do just fine.
False! You can not outperform your lack of savings. It might sound good in theory, but the math just doesn’t work.
Example:
(assuming $100k annual salary)
v/s
Saving more beats the higher rate of return. Why? Because the more capital you have, the faster it appreciates! The power of compound interest doesn’t work without something substantial to compound.
The 15% rate of investment return is not realistic (I believe a 7-8% rate of return is more practical), but I want to make the point because the 3% savings rate is commonplace. Inadequate, but very commonplace.
I know saving can be hard, but I know you can do it if you have help. (Remember, I told you I know a guy who can help!) I believe the best way is to force savings out automatically toward already defined targets slowly over time. Check out this video on how to go from 0% to 10% savings.
I would like to help you start planning with personalized strategies for saving and investing to help you achieve your goals. Planning is important and can be an easy process with the technology that’s available today. Doing nothing produces nothing. Schedule an introduction meeting with me today… it’s your first step toward the financial freedom you crave.
P.S. Feel free to email me with your questions!