Welcome to the first Fico Wealth Creation newsletter. This will be a quarterly update discussing methods of creating wealth in an easy to understand way. Creating wealth is quite a simple process as you will discover but most people who are wealthy rarely share their secrets. You are probably starting to think that we are going to promote or sell you something but rest assured the intention of these newsletters is simply to share with our clients the ability, skills and confidence to create wealth.
In this issue we will cover the following:
- Creating wealth, a general overview
- How to gain confidence and having the right mental attitude
Creating wealth, a general overview
Creating wealth is one of the simplest things you can do if you have lots of one component, and that is time. Simply by investing $1000.00 a year ($20 a week) you would have become a millionaire by the time you were 40 and have amassed almost $30 million by the age of 60.
I know a number of people who invest like this for their children or grandchildren, the earlier you get started the wealthier you will become. Of course these figures do not cater for inflation and $30 million in 60 years time will buy you much less than $30 million today will.
You also may notice that I have used an increase of 15% per annum which you may say to yourself is too high or even impossible to maintain. You would be correct in saying that if you were to put the money in a finance company or a bank and leave it there long term earning little interest, but with the right investments 15% on your capital is very achievable, in fact 20% would be more realistic with the right investments using the power of leverage which is explained in more detail next month.
How to gain confidence and having the right mental attitude
The main reason most people know little on how to create wealth is that it is not taught in schools. I find it strange that most people spend 12 years at school to prepare them for the wide world and yet the subject of investing and wealth creation is not one of the subjects. As life goes on you often see other people getting ahead and wonder how they got to be in that position. This was the case with me 10 years ago and by being nosey and willing to learn I find myself where I am today.
Once I knew that I wanted to invest, the main hurdle was being comfortable with investing. Looking for my first investment property I backed out many times as I was not comfortable in borrowing a large sum of money. It ended up taking me over a year to come to terms that I was making the right decision to take on more debt and invest. At this stage I thought all debt was no good, but there is good debt and bad debt which I will explain in detail next time.
Some people will never ever invest due to the type of person they are and will always say things like “you are so lucky” and “investing is risky”. Luck has absolutely nothing to do with it and yes investing is risky if you go into it blindly. Don’t let others pull you back and if you have a long term partner success will be much easier to find if you have like minded thoughts on investing. Talk to other like minded people. If friends or family become jealous then remember to never talk about investments when they are around.
To have the confidence to invest in anything other than a simple bank deposit may take time, but the more you know about the investments that are out there and the history of how they have performed will eventually give you the confidence to make you own assessment of an investment.
Next month's issue will cover
- Good debt vs bad debt
- Taking investment advice
- The power of leverage to accelerate investment returns
- Shares v Property as an investment
|