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Good news Sydney!
Looks like we are about to emerge from our Coronavirus cocoons real soon.
“Whew” (wipes brow).
But we have to stay vigilant people! Continue to fight the good fight.
Still, being out to venture outdoors and seeing a friendly face is a welcome change.
Mind you, I have been doing some thinking during this lock-down period.
Well, on ways to accelerate my wealth.
Nah, just simple and easy things anyone can do such as…
Using other people’s money
You see guys, one of the biggest difference between how the wealthy versus average person builds wealth is how they invest… not with their own money, but with other people’s.
If you’ve purchased a home or investment property – you are doing it already.
Because you’ve borrowed money (mortgage) to magnify your investment activity for accelerated returns.
For example, let’s say you borrow $400,000 to buy a property worth $500,000.
This means you have used $100,000 of your own money.
If that property rises to $600,000, you have made a 20% nominal return ($100k/$500k) AND you have made a 100% ($100k/$100k) return on your initial cash.
Of course, leverage works both ways – just as it can magnify your gains, it can also magnify your losses.
Using other people’s time and expertise
Another way we can accelerate our wealth is by using other people’s time and expertise.
You see, many of us waste time, energy and effort trying to do everything ourselves.
But it’s often said that if you are the smartest person in your team, you’re in trouble.
When I first started in real estate, I thought that the only way to learn was through the school of hard knocks – by being on the ground, doing it all myself and making amateur mistakes (plenty!).
I’ve now realized that much of the same info could have been obtained, if I had only asked the plethora of internet forums, reddits and social media groups out there.
Or even just connected with other members of the community to bounce ideas off and use their knowledge.
Take advantage of the law
This is one of the most overlooked and biggest factors to accelerate your wealth.
You might have heard the story that Warren Buffet is on a lower tax rate than his secretary.
This is partly because many tax laws were written to benefit business owners.
For example, here in Australia it goes something like this:
- As an employee – you earn money, you are taxed on those earnings, you receive what’s left over.
- As a business owner – you earn money, you claim on expenses incurred with earning this income, you pay tax on what’s left over and receive the remaining.
Understanding these principles has a significant difference to your cash flow, allowing you with more cash left over to invest!
Don’t take it from me, here’s billionaire Kerry Packer in his own words:
Even the biggest detractor to your wealth, is a legal term.
Divorce – the legal dissolution of a marriage by a court or other competent body.
Taking advantage of the law also means choosing the right ownership structures for your investments.
There’s a saying that the rich own nothing, but control everything.
Knowing which entity for which investment is crucial both for asset protection and also for estate planning.
Oh yeah, this is because the common folk like you and I – we think in the here and now.
The wealthy take the long term view, and think across generations.
Which brings us to the final and arguably most important point.
That being mindset.
I think if we have real aspirations to accelerate our wealth – we just have to think differently.
No more thinking along the lines of “I can’t afford this”, or “I can’t do that”, or “I don’t think that’s possible”.
But more like “How do I afford this”, or “Who can teach me how to do that”, or “Why isn’t this possible”.
I think the biggest reason that stops us from being successful isn’t that we don’t know how to do things.
It’s because we are so closed-off in our thinking that everything is black or white.
Personally, I think the most impactful approach to our bottom line – is opening up our minds to a whole new range of ideas and just be willing to always learn.
What do you think? Any other ways you can think of? Let us know in the comments below!
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