Snowballing Wealth..the key to it all

Real cash that constantly becomes more and more cash as the years pass by, and not from your labour; but from the investments themselves. This is real wealth, real financial muscle.

I call this a wealth snowball. This is beacuse as it grows rolling along it picks up even more snow *(cash) getting bigger and bigger. Unstopable actually.

Invetment sages often talk about the price of something- accumlating abig pile of 'loot'; but you can’t eat the ‘price’ of something like, say, a house or a share. Similarly in property they always mention yeild. You can’t withdraw ‘yield’ from an ATM. You can only use cash.

Cash purchases the stuff you enjoy, the breathing space to do what you enjoy, as well as the essentials of food, health and shelter. How to produce ever increasing payments of cash from your wealth is key to a great secure life. Forget its value in price terms- nest eggs dont matter!

10. Tips to set you off on the right path- a road less travelled.

1.It’s not about a big pile of loot. Nest eggs don’t matter. Funny that as everything you read about wealth is focused on the price and size of the loot you have, not the sustainable spending power in cash it provides you.

2.The first step is stop following what’s called the ‘price action’ of your investments. This is the daily, monthly, yearly price a market would pay you on the spot if you liquidated it all. You see it reported all day long; in newspapers, apps, financial commentaries, real estate ‘prices’, indices, gold prices, and in the reporting systems all advisers and institutions provide when they send you a ‘statement’. It’s the wrong focus however for an investor. Price action almost always leads you to making the wrong call on to buy/sell/ hold a particular investment. This leads me to the next point, trading. Trading relies on exploiting with brilliant timing changes in the price of something.

3.Trading is not investing. Investing doesn’t require excellence, brilliant timing or high levels of expertise. Investing is far less risky and requires a focus on how time impacts what you invest in. Patience, interest in learning the basic mechanics of investing, some reading, and an attention on income.

4.You might sub-contract the task out to an adviser, but beware; most advisers are in a perpetual state of confusion between trading and investing, are creatures of the same system designed to relieve you of too much of your money for their needs, focused on the wrong things, and above all, the few really good ones still need you to educate yourself on investment matters. No adviser I have met knows what real wealth is.

5.Focus on income even when the objective is growth. Decent investments produce income. This income is the main long-term driver of price (capital value/growth) of an investment. Minerals, food stuffs, oil and precious metals are commodities. These are best traded and/or some used as ‘insurance’. Investors however don’t need them. If buying shares or real estate, focus on how the cash is likely to grow in pay-outs to you over time. This will exclude; property development, resource companies and some tech’ shares. There will be times when in the background, you consider the growth in price but this will be rare. Set an ‘I don’t want to know about it’ mind-set unless price moves up/down by more than 15% in any 3 month or less period (see Tip #10).

6.Movements in price (volatility), is rarely risk if it’s a quality asset and it is liquidable. Thus knowing what the quality factors are is essential- and easy once you know how. Some of these factors are; is the investment managed well day to day, and the people behind it- what’s their track record like? Is the volatility profile suit my time horizon for any need to cash part/all of my investment in? is the industry it’s in facing disruption? Am I attracted to it mainly because its price (capital value) going up! (A big no-no by the way). Do I understand how the investment is making money for itself? Don’t invest in anything where you find it hard to understand how it makes money.

7. In an age of easy cheap debt fuelling asset price inflation and little wage growth, savers will never catch up. (into bonds or a bank account). They are not good investments in the main. Save only to create your short term emergency fund or place here if you may need to spend a big chunk of your wealth inside 18 months. Save money by consuming less in the shorter term; but that’s it.

8. Buy toys (cars and big holidays etc) only from the income your investments make, not from your wages. Thus for a few years when starting out- defer such purchases. Patience applied allows time to compound your cash from your investments. It also embeds new habits that you will find as easy and alluring to spending.

9. Reduce and replace bad debt with good debt. Bad debt = anything that purchased a ‘Pleasure’ item or experience. They usually always go down in value or have no residual value nor produce income. Cars, holidays, nights out, your own home and clothes are good examples. Good debt = anything that produces cash over time and tends to go up in value. Investment real estate, shares or a private business investment. There is a simple low cost way to achieve this for those with a mortgage over their own home. Contact us for how.

10. Fiddle with your partner not your money! It’s more fun and it won’t get you into too much trouble. People tend to react to headlines and financial ‘sages’. They see the price of their investment move and then feel compelled to move with it. Don’t! It’s a natural human instinct however- one that got us to the top of the food chain, but it’s bad for investing. At Changing Life and Wealth we show you how ;)

The secret to wealth? There is no secret, that’s the secret.

No fast cut corners, earn a squillion in no time etc. In fact getting real wealth in a money sense is bloody boring.

Snowballing wealth: It’s methodical, simple to do and only quietly evolves over time. You can start at any age. This is the race between the ‘hare and the turtle’. The turtle’s outcome is more enduring. The turtles approach gives you a lifetime of freedom and enjoyment. The hare’s outcome is for as fast as it can run short term before it falls over either exhausted or shot.

Investing for real wealth won’t give you much to talk about at the proverbial BBQ or dinner. In early years friends will have bigger homes and flasher toys. Someone will always boast a better performing investment than you will own.

But one day when you look at the cash you have pumping out in ever increasing quantities, it will exceed what you need. You will then reinvest even more of that and this will produce even more of it.

It’s at this point when you have exceeded what you need that wealth has met its first end goal for you.

So what do you do then? Keep it growing, doing what you’re doing now, but in a foundation/trust for others. For those causes, groups and efforts you deem worthy for the good of the world. You and you alone defines what that is.

Beware: The ‘high profile’ wealthy person. So many books and stories and social media sound-bites on famous people that have lots of the trappings of ‘wealth’. From a distance their life sounds wonderful. For nearly every one of any age or background or country, at some point along the way they created a very narrow way of viewing life and a gilded hamster wheel of their own making.

They have the trophy’s- big homes they rarely use or visit, big toys, a public profile etc. They have the same rate of divorce, dysfunction and mental health issues as anyone else. Happy or fulfilled- probably not, so don’t set your standard by them.

This is why I think this;

1. Ask those close to them about what they are like as people, as a father, mother, sibling or friend. ‘Arsehole’ comes to mind - a common outcome for the men. I’m not sure about women- perhaps they are better.

2. How often are they engaged in things that didn’t get them to a place of wealth? How much do they enjoy their ‘toys and rewards’? Most don’t and can’t. How much time are they devoting to new things? Most big CEOs simply take on another CEO role until they die out or get fired. Most self-made types keep doing the same old thing (the biggest exception around would have to be Bill Gates- a truly remarkable person).

3. Most at a weekend away would bore the crap out of you. Narrow conversations droning on. Nothing to say outside of their vocation or themselves. This is all they know, all they do. This is how they define themselves. One -dimensional. Not something one should covet.

Read one of these books now: Motivated Money (Peter Thornhill) Sell up, Pack up and Take off (Stephen Wyatt) The 4 hour Work Week (Tim Ferris) You Unlimited (Christopher Lyons) The Subtle art of Not Giving a fuck (Mark Hanson).