Contradiction In Terms
Understanding how wealth is created and compounded further by passive income and the network effect is an extremely valuable asset to have. Have you noticed how many wealthy people lose their fortunes only to rebuild them again? This is also usually attained in next to no time. Understanding how to create wealth is more powerful than being wealthy. Someone born into wealth would have little success were they required to rebuild their wealth outside of their family’s fortune. Unless of course, they were taught the principles of wealth creation throughout their life. This is where the majority fail because they think that in owning a sports car and a mansion, they are wealthy.
This is what the majority of society tends to do, they set about acquiring the fruits of wealth and not the tree. They incur massive debt in order to live in “the house” and drive a nice car. If they were honest with themselves they would see how flawed their approach is. Wealthy people don’t live constrained under the burden of debt. Sure, wealthy people utilize debt but only to increase their wealth, not buy cars. It’s all just a facade and sadly, the approach of so many.
Acquiring and maintaining wealth requires that you do not waste capital on liabilities. You increase your ownership of cash-producing assets and investments. These are not necessarily visible or even tangible but they have value. They also go on to create further value.
The Deception Of The Visible
The majority of society tends to treat their income as disposable, spending to impress. You are not wealthy by how much money you make but by how much you retain. There is a proverb that I really enjoy that explains this dynamic very well
There is one who pretends to be rich but has nothing; Another pretends to be poor, but has great wealth
Instead of seeking to impress people that are not even concerned with your financial status, rather focus on “invisible expansion”. Grow investments, build passive models and acquire cash-generating assets. Some of these are visible but not necessarily associated with you in a visible way. Choosing to build, as opposed to living to impress will benefit your life in time and provide stability for your family. I have seen guys with fat salaries run out of cash before month-end. The reason is that they are living to impress.
A person earning far less that chooses to save a large part of their income is wealthier than the one who earns a large salary but squanders it.
Invisible Expansion Later Becomes Independence
Growing and expanding your income and investment network can later become something so powerful that it can actually create financial Independence. However, those who choose to spend and shun expansion will never know and experience the fulfillment of applying this wisdom. This really is a “snowball effect” and after years of dedication, the fruits begin to appear. These are my own personal views and I guess everyone has their own unique idea of what is required to create wealth. Anyway, as long as you are working towards a goal, you are at least moving. Changes and adjustments can always be made to further enhance a strategy or idea.
Thanks for stopping by and see you very soon!