- First, find your reason: WHY do you want to become rich?
Becoming rich is hard. This is self-evident; if becoming rich weren't hard, we would ALL be rich.
It is the WHY of becoming rich that provides the passion. It's the passion that drives the massive action. It's the massive action that makes you rich.
HINT: simply wanting to be rich won't do it. You'll give up at the first roadblock ... or the next. It's simply too hard without an all-encompassing reason that drives you on.
- Secondly, you need to find your method. There are three ways to become rich ... you must choose at least one:
1. Luck: you can win a lottery; be born into wealth; or, marry wealthy.
There are two problems with this option:
a) if you don't learn the lessons of money on the way up, it will be a fast fall on the way down. 90% of lottery winners are broke within 5 years. Greater than 50% of marriages break up. Wealthy families often use the threat of money to ensure compliance to (their) family values in their children: ie golden handcuffs.
b) there's no fulfilment in simply 'making money out of thin air'.
2. Risk: you can gamble your way to wealth in the casino (e.g. play poker; count cards); in the stock market (options trading); or, aggressively trading ('flipping') in the real-estate market.
The problem with this strategy - which has been successfully employed by some of the wealthiest people in history (eg Jesse Livermore & George Soros in the stock market; Donald Trump in the real-estate market) - is that it's a white-knuckle roller coaster ride that ends in financial suicide for over 99% of those who go 'all in'.
3. Add Value - the BEST way to become rich is to add massive value.
For example, in business, find a problem that affects a huge number of people and solve it. Turn that solution into a product or service. Turn that into a business. Scale up fast. Sell well before your Solution's natural lifecycle ends.
- Thirdly, you need to protect your wealth. You need to learn the hard Financial lessons that will stop you from losing your money when you have it.
This includes:
i) earning more than you spend - if you earn $20m don't spend even 10% of it a year.
Instead, spend it in this order: pay Uncle Sam any & all taxes due (don't be tempted to skimp; it WILL, come back to bite you); take a small salary; reinvest in your business; then, if you have anything left over, invest (real-estate is an ideal accompaniment to business income because of its low-risk profile, stability, and tax-advantages).
BONUS: in addition to your small salary, here is how you safely reward yourself for all your hard work - you can spend 5% each year of the accumulated total in your investment accounts. This should give you an enviable - and, completely sustainable, ever-increasing - standard of living.
ii) pay down your expensive debt as quickly as possible - but, don't make the mistake of paying down ALL debt. Debt is an investment like any other; remember the saying "a dollar saved is a dollar earned"?
Well, that applies equally to debt: a % in interest saved (after tax) is EXACTLY the same as a % in interest (after tax) earned.
- Finally, the most important thing to remember is that being RICH is hard work, and probably not worth the time, effort, or risk.
Instead, aim to become WEALTHY: this means having enough to sustain YOUR chosen lifestyle in perpetuity, no more and no less.
Becoming rich is hard. This is self-evident; if becoming rich weren't hard, we would ALL be rich.
It is the WHY of becoming rich that provides the passion. It's the passion that drives the massive action. It's the massive action that makes you rich.
HINT: simply wanting to be rich won't do it. You'll give up at the first roadblock ... or the next. It's simply too hard without an all-encompassing reason that drives you on.
- Secondly, you need to find your method. There are three ways to become rich ... you must choose at least one:
1. Luck: you can win a lottery; be born into wealth; or, marry wealthy.
There are two problems with this option:
a) if you don't learn the lessons of money on the way up, it will be a fast fall on the way down. 90% of lottery winners are broke within 5 years. Greater than 50% of marriages break up. Wealthy families often use the threat of money to ensure compliance to (their) family values in their children: ie golden handcuffs.
b) there's no fulfilment in simply 'making money out of thin air'.
2. Risk: you can gamble your way to wealth in the casino (e.g. play poker; count cards); in the stock market (options trading); or, aggressively trading ('flipping') in the real-estate market.
The problem with this strategy - which has been successfully employed by some of the wealthiest people in history (eg Jesse Livermore & George Soros in the stock market; Donald Trump in the real-estate market) - is that it's a white-knuckle roller coaster ride that ends in financial suicide for over 99% of those who go 'all in'.
3. Add Value - the BEST way to become rich is to add massive value.
For example, in business, find a problem that affects a huge number of people and solve it. Turn that solution into a product or service. Turn that into a business. Scale up fast. Sell well before your Solution's natural lifecycle ends.
- Thirdly, you need to protect your wealth. You need to learn the hard Financial lessons that will stop you from losing your money when you have it.
This includes:
i) earning more than you spend - if you earn $20m don't spend even 10% of it a year.
Instead, spend it in this order: pay Uncle Sam any & all taxes due (don't be tempted to skimp; it WILL, come back to bite you); take a small salary; reinvest in your business; then, if you have anything left over, invest (real-estate is an ideal accompaniment to business income because of its low-risk profile, stability, and tax-advantages).
BONUS: in addition to your small salary, here is how you safely reward yourself for all your hard work - you can spend 5% each year of the accumulated total in your investment accounts. This should give you an enviable - and, completely sustainable, ever-increasing - standard of living.
ii) pay down your expensive debt as quickly as possible - but, don't make the mistake of paying down ALL debt. Debt is an investment like any other; remember the saying "a dollar saved is a dollar earned"?
Well, that applies equally to debt: a % in interest saved (after tax) is EXACTLY the same as a % in interest (after tax) earned.
- Finally, the most important thing to remember is that being RICH is hard work, and probably not worth the time, effort, or risk.
Instead, aim to become WEALTHY: this means having enough to sustain YOUR chosen lifestyle in perpetuity, no more and no less.
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