Ladies and gentlemen,
Have you heard of wealth building?
How many of you know exactly how to build your wealth?
After hearing lots of misconception of wealth creating, I would like to share with you some of my ideas and knowledge about its true meaning and the effective steps of achieving it.
This is also my intention and passion to coach and assist people to build their wealth to ensure financial independent so that they have better control of their life.
However, self accountability is to it. No one can help you to achieve it if you do not desire to do so.
Everyone needs to know how to fish, which is the only way of assuring him of having fishes for the rests of his life.
What is definition of WEALTH ?
To create wealth, istis vitally important to understand its definition right.
It is not equal to richness. Richness is a relative and subjective term which has no definite meaning.
Wealth is neither equal to income. Big income does not guarantee that it will generate wealth. It is very much dependent on the person how he consumes it.
Wealth is the residual income after all the expenses. As such, wealth is the Net Worth that is accumulation of your residual income over time. Therefore, to create constant and lasting wealth, you need to add value to all your financial resources which are simply utilized to create added residual value over time.
It usually involves three simple processes as follows:-
1. CREATE WEALTH
The key here is create as much as possible your residual income after the deduction of all expenses wholly incurred to generate that income. I re-emphasize that it is NOT the quantum of the income, but its residual.
To do so, you have to control your expenditure, at the same time to create the residual income. Or you have a choice to spend the residual income away to acquire a higher lifestyle. Egos and peer pressure dictate how you spend or use it to create more wealth.
It is a subject many of us fantasize about, but only few will be able to materialize in their lives.
2. ACCUMULATE WEALTH
Not all assets are of equal value in promoting long-term wealth. The real key to creating wealth is highly dependent on how much you spend on to acquire assets which really appreciate in value and thereby increase your personal net worth over time.
Otherwise, if he spends on things that depreciate in value, then his wealth will decrease.Therefore, the more money that is spent on Wealth-building Assets, the faster you will achieve a higher net-worth. One good example is good properties which appreciate over times.
3. TO MONITOR AND GROW THE WEALTH
Once you have created several wealth building assets, you need to comprehend their nature of trade and risks profile so as to take full advantage of their potential and to grasp the highest possible yield at any time. Needless to say that you need the skills and know-how which you should acquire by reading, analyzing and attending courses etc.
Here, you need to monitor each type of wealth-building assets in term of its return, growth in value and potential value vis-à-vis its risks.
However, you also need to purchase other type of assets out of necessity, for entertainment or other reasons which do not add value to you indirectly such as to facilitate your works or which may generate more value than their cost.
. Some of examples of non-wealth building assets are:-
- TVs
- Washing machines
- iPods
No doubts debts can kill. However, if you know how to use them to generate income which exceeds the cost of borrowing and generate positive cash flow. Then, it makes sense for you to leverage on debts to generate more residual value for you.
I hope that I have given some understanding on the true meaning of wealth and the simple three process of creating, accumulating and managing its growth. This is a very basic and fundamental framework for everyone who intend to build wealth and it is vitally important to get this right in the first place.
I wish everyone success in building your wealth and empire and don’t forget to buy me a 5 star dinner then.
James Oh
