The Limitations Of Human Effort
No matter who you are working for, you are going to face two very real obstacles to generating wealth. Firstly, a human limitation as to how many hours you are able to work, and secondly, a limitation as to how much a boss is prepared to pay you. Let’s be honest, unless you are high-level CEO, you are somewhat limited in your ability to generate wealth.
Warren Buffet is well known for pointing out that unless you find a way to earn money while you sleep, you will end up working your life away. In this particular instance, I actually agree with Buffet. So, what is the essence of this well-known statement by Buffet? Well, he is basically suggesting that money is earned, while wealth is created.
In other words, work during the day for your living expenses, and find a way to generate some form of passive or residual income that is working for you 24/7. Of course, you can find a way to help the process by incorporating a side hustle. However, unless those earnings are going into some type of passive or compounding mechanism, you are still operating in the wage arena.
Investments, Passive Income & Compounding
The wealth arena is generally one of investments, passive income, and compounding. By making use of these three pillars of financial wisdom, one can begin a journey of creating wealth. Ideally, this is a journey embarked on early in life. The creation of wealth takes time. Fortunately, Crypto offers many of us a way of speeding up the process.
This is a very broad arena, and subsequently offers investors an array of opportunities. Real estate has always been an investment class that has performed exceptionally well over the long term. However, there are many barriers to entry for more conservative investors. Tokenized real estate is definitely an avenue to explore for those who are looking to gain access to the real estate market, but have limited capital.
Traditional Crypto investments with the potential for enormous gains are always on my shopping list. There is nothing like a good 50X, 100X, or more! Investments like these can literally catapult an investor into a newly found position of wealth. Altcoin hunting is a practice that carries a high level of risk. However, the tremendous potential that this strategy carries is truly unparalleled.
This has always been top of my list. There is something almost sacred about setting up a system or mechanism that continues to “print money” without any oversight or effort. This is literally earning money while you sleep! Staking is an obvious option, and in many cases offers daily income. Tokenized real estate also has a passive dynamic to it. While the property is appreciating in value over time it is also producing daily rental income.
There are many other ways of setting up and establishing a form of passive income. Whether it be older tried and tested methods or more current alternatives such as DeFi. If you are thinking of investing in DeFi, you might find the following article helpful: “The DeFi Dynamic – Enjoying Success Where Many Fail”. DeFi carries inherent risk, so definitely do your own research.
The final ingredient is to add the dynamic of compounding to your investment income, as well as your passive income. This creates a powerful synergy that goes on to increase your holdings over time. Compounding is a very effective strategy, especially over the longer term. If you do a few calculations, you will discover just how powerful it becomes as time passes. It literally takes on a creative life of its own. A continuous flow of income that is further compounded is a truly powerful dynamic.
Unless you begin operating within these practices and pearls of wisdom, you are unlikely to encounter any meaningful degree of wealth. A wage can only go so far and accomplish so much, no matter its size. Furthermore, you often find that high earners become high spenders, basically nullifying their high income. Wealth is created, not earned. See you next time!