I’ve recently seen a few professionals and some business people who’ve left their wealth-building a little too late in life.
They’ve come to me for advice on property investment in their 50’s (and one in his 60’s) saying they left their run late, hoping their business or practice would have provided for their old age.
And now they realise it won’t!
By the way…
Even if you are not an employee or self-employed, this will be useful for you, because I’d like to share 6 important tips on building wealth independent of your job, profession or business:
1. Risk comes from not knowing what you’re doing, so pay the price to learn what you’re doing!
Sounds obvious I know, but most business owners and many professionals I know are ego-driven – that’s what makes them successful in business – but they are uniformed investors.
As you can imagine this is an explosive combination.
They tend to let their business or professional success blind them into thinking that they know more than they really do in the investment arena.
2. Make sure your investment plan matches the financial stage you’re at.
I see many people with a good job or sound professional or business income invests in what they think are “cash flow” investments.
They don’t really need more cash flow at this stage of their lives – they don’t realise cash flow won’t get them out of the rat race.
What they should be doing is to put their money into capital growth investments that would help them build a substantial asset base – that’s what will get them out of the rat race.
The lesson: make sure your investments match your current financial situation, don’t just follow the old plan that got you to your current position.
Even if it worked brilliantly it may no longer apply to your current situation – that’s because if you have your ladder up against the wrong wall, every step will get you further from your destination.
3. Concentrate your investments in fewer, better deals
There is a cost to every deal, so make sure your deal is meaningful enough to merit the time, focus, and expense.
The wealthiest people believe in concentration of capital.
They become experts by doing the same thing over and over again, rather than one hundred things once.
4. Invest a portion of your time and energy (at least 10 percent) to creating and executing your wealth plan
Building a successful business or profession is obviously going to be a big part of that plan, but it cannot be the only leg to the plan.
Why?
Because there will be a day you may no longer have the business.
Either you may sell the business, then you’ll need the skills of how to invest the cash from the sale to generate the passive and passive residual income you need.
Or the business could fail, in which case it will be even more important to have “run some of your money from the table” and have this money invested wisely in a way that ensures your financial future.
Or we’ll have another Black Swan event, a pandemic or X-Factor that will be out of your control
The same goes for professionals and employees…
5. Leverage your strengths when looking for investment opportunities
There is a learning curve in mastering any investment vehicle, which is why it is so valuable to leverage the advantages you already have.
Do you know a specific industry and have a network of contacts that give you information advantages?
Of course, if you are investing in publicly traded securities you can’t trade on “insider information” – that is information that is not publicly available.
Which is one of the reasons I like investing in property since I not only get paid for my “insider information” but it’s totally ethical and legal to trade on this privileged information!
What are your advantages?
What contacts, expertise, and experience do you have that you can leverage?
6. You must become your own most trusted investment advisor—no one can do it all for you
Too many business owners make the monumental mistake of thinking that investment success is a matter of choosing the right investment advisor to handle their wealth for them.
It costs them dearly!
Sure you need a great team around you and you don’t need to be (in fact shouldn’t be) the smartest person in your team.
But no one—no one—will be able to manage your wealth as you can.
So while you need good advisors, you need to have the sophistication to filter and use the best of your advisors.
This means you’ve got to invest the time, energy, and money to master the skill of managing your own net worth.
I’ve watched a number of business owners spend 10 years building a multi-million business, then through dumb investment decisions they lose much or all the money they had made with their businesses.
Whatever you decide to do, we can work with you to make sure your strategy suits your lifestyle, circumstances and financial goals. Contact us at 08 8211 7180 or info@centramoney.com.au.
Article courtesy of Michael Yardney’s Property Update.