Leveraging and Duplication

LADA Wealth Building Steps

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Golden rules to Wealth Building

Understanding the foundations of wealth creation is the key to successfully share investing.

There are three laws of wealth creation that have been around for thousands of years that go hand in hand with any investments you may make in your endeavors to become financially independent. In my experience, the most common reason people fail to achieve financial independence is due to lack of knowledge. For others, it’s probably due to a lack of confidence in their abilities to apply the knowledge. However, I think the following quote explains well why people may fail to be successful not only in investments but in other areas of their life:

“They who lack talent expect things to happen without effort. They ascribe failure to a lack of inspiration or ability, or to misfortune, rather than to insufficient application. At the core of every true talent there is an awareness of the difficulties inherent in any achievement, and the confidence that by persistence and patience something worthwhile will be realized. Thus talent is a species of vigor.”

Interestingly, many people are willing to spend years studying, with the expectation that they will obtain a job that will pay enough to enable them to sustain a desired lifestyle. Yet when it comes to educating themselves about how to create wealth, they never quite find the time. Instead, the majority seem willing to live from pay check to pay check, which means they have to work harder and longer to create the extra income that will satisfy their needs.

The desire for individuals to have whatever they want now and pay for it later means many forego the required planning process for their retirement years. But this need not be the case, as it is never too late to get your investments in order.

By simply educating yourself on the ‘three laws to wealth creation’ below you can build a solid foundation and ensure you have a sustainable income during retirement.

Based on my experience, I feel that many people do not give enough thought to these time proven principles. So, let me ask you this – are you truly building a next egg to ensure your financial independence during your retirement years or are you treating your financial independence as a ‘nice to have’?

Three laws to successful wealth creation are:

  1. Spend less than you earn;
  2. Invest your surplus wisely (at least 10% of your income); and
  3. Leave it alone so it can grow.

Unfortunately, the majority of Americans do not obey the first rule of spending less than they earn and are therefore unable to move on. For those who do obey the first rule and move onto invest their surplus cash, many also fail to do their homework beforehand. As a result of their lack of knowledge in this area, they either don’t invest wisely or are unable to leave their investments alone long enough to compound over time. So, here’s a breakdown of the three laws to get you on track.

  1. Spend Less than You Earn

It is usually this first rule that creates considerable anxiety for people. This is because many do not have a budget or spending plan. Without one, how do you know:

  • How much you are actually spending; or
  • How much you can save?

Usually, it is not until the end of the financial year that people realize just how much they have earned. But when spending habits are quantified, only then we do we know how much we can save. Indeed, a spending plan is like a roadmap to financial independence – it provides you with a plan of attack that allows you to create your preferred reality.

I won’t go into budgeting here as there are many good books and computer programs that can assist you, but this essentially this first rule is a crucial starting point for an investor.

  1. Invest Your Surplus Wisely

The second rule to creating wealth is to invest at least 10% of your income wisely. All too often people do what is simple or easy rather than what is wise when it comes to investing. A wise investment, however, must give you capital growth and it must give you income. If an investment does not have both of these components, then someone else is benefiting from the component that you are not getting. The leveraging and duplicating markets give you both capital gain and income, making them two of the best investment vehicles for you to create wealth. Given the expense of investing in property, those that are looking to start building wealth are wise to use the leveraging and duplicating market until they have sufficient capital built up for property or whatever you want to do with the money.

  1. Leave It Alone So It Can Grow

The third rule to wealth creation is to leave your investments alone to grow. When you invest wisely, your money will normally earn you income and capital gains. When you reinvest these earnings, it yields additional income and capital gains because of the compounding effect. This also applies to income received from any tax rebates you might get as a result of investing. The rule is that whatever comes from investing must be used to invest more, or compound. Consequently, it is this rule that is the real key to wealth creation. Therefore, once you embark on your investment journey you should leave your capital alone to allow it to grow. Only when your investments are generating income and growth that is equal to or better than what you earn from working should you consider using your investments or income for lifestyle purposes.

How to make a 400% return on investment

Pay yourself first $10 returns $40

 Pay yourself first $25 returns $100

 Pay yourself first $50 returns $200

Pay yourself first $100 returns $400

 Pay yourself first$200  returns $800

 Pay yourself first $400 returns $1600

 Pay yourself first $800 returns $3200

 Pay yourself first $1600 returns $6400

All of this is done by using Compound Leverage: Compounding is the ability of an asset to generate earnings, which are then reinvested in order to generate their own earnings. In other words, compounding refers to generating earnings from previous earnings.   Leverage is the advantageous condition of having a relatively small amount of cost yield a relatively high level of returns

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