Wherever you look these days you find promoters of ‘get rich quick’ schemes or motivational courses aimed at changing your mindset in a way that will supposedly, as if by magic, attract wealth into your life. While many of these schemes and courses have merit, often the wealth flows to the providers rather than to the participants. There are only two ways to get rich quick and I will mention these later.
Let me start by saying that getting rich quick is like building a prefabricated house. Once you have a good foundation the construction is quick and easy. If your foundations aren’t solid and straight you are likely to end up with something that could well fall down. Good financial foundations are made up of a strong asset base and a positive cash flow.
To have a strong asset base means owning assets such as property or investments which increase in value over time. The best measure of a strong asset base is the difference between the value of those assets and the amount of debt you have. It’s all very well to own a million dollar property, but if you have a million dollars owing by way of mortgage and other debts then you really have no asset base at all. A good asset base will give you the ability to stay strong when things don’t go according to plan.
Having a positive cash flow means that the income you receive on a regular basis from employment or your business is greater than what you spend on a regular basis. If you have a positive cash flow, then you have the power to add to your wealth over time.
Some people, particularly young people it seems, are impatient when it comes to building wealth. Too often I have seen people with high levels of debt, unable to save, but wanting advice on the investment of a small sum that has come their way as an inheritance or a windfall of some kind. Because they are struggling to get ahead financially, they want to invest their small sum in something that will multiply their money several times over. What they fail to realise is that investments which have the ability to multiply your money also have the ability to fail. In the worst case, you may lose more than you initially invest. Risking everything you have has much more dire consequences than risking a small part of what you have. The stronger your financial foundation, the more risk you can afford to take and therefore the quicker and easier it is create more wealth.
I mentioned earlier that there are two ways to get rich quick. The first is to borrow money to invest in property. The second is to invest in businesses – either your own or somebody else’s. Both of these strategies require a solid financial foundation and two other key ingredients; time and expertise. Use the time while you are building your financial foundation to learn what you need to know to be a smart investor in property, shares and businesses and to put together a team of experts who can help you. Start slow, be strong, do your homework and riches will quickly follow.