Do you aim to be wealthy?  Wealth gives you options and provides the good things in life – access to health care, good food, travel and education for your family. The wealthy person is not easily concerned by loss of employment or economic hardship.

Wealthy people are not smarter or better at what they do. They generally don’t have their money left to them.  There is one key difference between people who are wealthy and those that are not – read on to find out more about this wealth secret.

The secret is that the wealthy invest for the long-term, and those who are not wealthy (this includes some very high income earners) – do not. Investment may be in stocks, real estate, businesses or other assets – anything that increases in value and produces income. That seems simple and obvious, but it isn’t.

Firstly, what is wealth?  Wealth isn’t income, and wealth isn’t even assets. Wealth is one thing – controlling assets that give sustainable income to support your lifestyle without having to work yourself.  Wealthy people have accumulated assets that provide an income for life, and they have done that by investing their income to buy income producing assets.

The high income earner who doesn’t invest their income stream is just another middle class wage slave. Although they have some trappings of wealth – the leased car, the mortgaged house – they have to keep working because tax takes so much of it.  As soon as they lose their job, their lifestyle stops.

Many people are searching around for the next job, investment opportunity or trading course that will make them wealthy but this is not the answer.  At best, this simply increases income, not wealth. If you want to be wealthy, you need to start to invest.  This means making investment a priority in your finances.

You may think that one hundred dollars here and there makes very little difference, but it does. Why?  The reason that small amounts of savings can lead to wealth is the secret of leverage.  Wealthy people use leverage. In the same way that a lever multiplies force, leverage multiply their efforts and capital by using the effort and capital of other people, while controlling everything.

They leverage effort by focussing on what they do best, employing other people for other areas. This is similar to how a large corporation outsources its cleaning or IT instead of doing it in-house. A wealthy person will use an accountant to do book-keeping, and even employ people to help out with household tasks if it allows them to focus on what they are best at.

The wealthy leverage money by having access to lines of credit for investment purposes. The interest is generally a tax deduction. This is important to the wealthy person as tax is one of their largest expenses. The wealthy person always seeks to convert income into assets, and leveraging money is the way that they do this.

The wealthy person invests in assets that they understand, including their own business. Generally, the wealthy are not stock traders, frantically buying and selling at each rise and fall of the markets. They are more like farmers planting seeds and carefully tending the crop as it grows.  They tend to diversify to spread their risk over a range of sectors and take close personal control of their assets instead of delegating this task to someone else. Their aim is long-term capital gain (which they can realise by borrowing against their assets) and income (preferably in a tax reduced way).

Wealth is a worthwhile goal.  To be wealthy, become an investor, even if you start small.  Stick with what you know, leverage your investment and carefully watch over your wealth as it grows.

Tags: Wealth

This entry was posted on Tuesday, April 6th, 2010 at 8:59 pm and is filed under Wealth. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.