What is Wealth Creation? How we define wealth and being wealthy is subjective.
If you’ve decided to quit your typical survival lifestyle and head into wealth building, this article is for you.
It’s time to rethink your attitude and actions toward work and financial security. You need to understand what differentiates the mindset of a millionaire from that of an ordinary earner. To help, here’s what you need to know about building wealth, assets for building wealth, and strategies for building successful wealth.
Wealth Creation: A Brief Overview
How we define wealth and being wealthy is subjective. For some, being rich simply means having enough money to cover daily needs, bills, and extra for recreation and care. Others, like you, may be thinking about being able to travel and spend without worrying.
Regardless of your perspective and your reasons for wanting to accumulate wealth, wealth building is an ongoing, long-term process. It’s about generating long-term income through multiple sources .
Building wealth isn’t just about focusing on your current business income. Even if you change your lifestyle while continuing to earn the same salary, it is practically impossible to leave your life as an employee.
Still, of course, you need your current income-generating job before you start building wealth. You need resources to be able to start somewhere. To make decisions, you need to rely on accurate information, proper planning, and setting goals.
Find out about the side activities and investments in which you could participate. If you want to increase your knowledge and skills in entrepreneurship, you can enroll in various certification programs. You can have access to some of them for free.
Building wealth consists of participating in long-term income-generating activities. You will discover its importance in the next section.
Wealth creation: A profitable use of time?
Take a moment to review your income, financial situation and lifestyle. If you think you’re earning enough to support yourself and your wants, you might ask yourself, “Is wealth building for me?” Obviously, yes.
You may be earning enough for now, but remember that you are building wealth for the unpredictable future.
You need to understand that building wealth is more than just a way to show off and brag about your life. It’s about how you’re going to outgrow your current financial situation, not just outgrow someone else’s.
Here are the top three benefits of building wealth:
1. Free yourself financially
You live in a capitalist society, which is why almost everything requires money. You want to acquire real estate, you need money. You want to invest in profit-generating activities or start your own business, money is essential capital.
Building wealth gives you the freedom to do so. Imagine being able to break the cycle of debt and “just enough”. Thanks to wealth building, you will soon be rich independently.
2. Opening doors to various opportunities
With accumulated wealth and a secure source of income, you will have wider options. Now, money will not prevent you from choosing to advance your professional career or risking yourself in various investments. Careful planning will always be part of the process.
But you shouldn’t be afraid to pass up an opportunity just because you can’t afford it. For entrepreneurs, for example, you can successfully diversify your investment portfolio .
3. A healthy and comfortable retirement
No one wants to run out of money, do they? This may be why you often wonder “How long will my money last?”. This may not be a problem, especially if you are still in the busiest time of your life. However, it will become a serious concern when you cease to be employed.
If you dream of a healthy and comfortable retirement, building wealth is the answer you are looking for. This allows you to live comfortably even after you retire. If you want to take the time to travel afterwards, your investments will take care of the bills.
The most profitable assets for building wealth
Wealth-generating or wealth-creating assets refer to goods or assets that generally increase in value over time. These are assets that make money. While some may outperform others in terms of yield, everything has its tradeoffs.
The key is to choose the wealth-creating asset that is best for you based on your financial goals. Let’s take a closer look at some of the best performing wealth building assets.
1. Real estate
A study published in 2017 found that residential real estate has the highest gain compared to other forms of investments. The return on investment averages 7.5% per year.
This makes real estate properties one of the best-known smart investments for many. Apart from having the highest gain, investing in this sector will most likely provide you with consistent cash flow.
You can choose from several real estate options. You can buy or build rental properties or even investing in home buyouts is also a popular activity these days, in which you buy properties, renovate them and then resell them for a profit.
One of the advantages of real estate investments is that you have complete control over your decisions. You can strategize and decide what you want to do and how you plan to do it. In other words, you are responsible for turning your assets into real income. But it can also be risky, especially if you don’t know much about this industry.
2. Private Bonds Secured by Real Estate
If you want to continue investing in real estate, but in a safer way, real estate notes are for you. Instead of investing directly in real estate, you act as a lender through real estate notes.
You provide promissory notes to someone else who owns real estate to secure their future payment. However, if you are new to the business, it is important that you do some checking first. You don’t want to fall for some kind of scam.
Also, since it will take time before they pay you, you need to make sure you have a reserve fund . Just in case you find other things worth investing in. There are three basic types of private tickets:
Home renovation loans
These types of loans are usually for shorter terms, like 6 to 12 months, with higher interest rates. As the name suggests, you will lend to people who invest in buying houses.
According to experts, this type of loan will pay off if you know exactly what to expect.
Loans for homeowners
It’s quite simple. You will act as a lender for aspiring homeowners.
You are probably also curious about how much money you can earn from stocks. But before even talking about the earnings, you should know that they will not be the same for everyone.
Even with people who have the same actions, it is not possible unless you move the same. This is best for a long-term investment, as stocks are unpredictable, which can affect returns, especially in the short term.
You can choose to invest in just one company. However, it will be more beneficial to diversify your portfolio and buy ETFs. This is also beneficial, especially due to market volatility. For those who are new to the stock market, you can check out: our article on how the stock market works .
You’ll find the basics of stock investing and tips on how to buy your first stock.
How to Get Started in Wealth Creation and Get Rich
Various resources will provide you with steps and techniques for building wealth. For example, you can try to read articles published on other financial websites.
But these are just some of the basics that will guide you as you begin your wealth-building journey. Note that success will only come if you integrate this approach into your daily habits.
1. Set a clear goal
It is not wise to accumulate wealth aimlessly. On the contrary, have a clear vision of your objective. Plan and set a numerical goal of what you want to achieve. It helps to try to imagine the kind of life you want to have after 15, 20 or after retirement.
The wealthy people you know probably set a target number and work towards that goal. It’s a bit like going on a trip. You need to know your destination and then decide how you are going to get there.
2. Think long term
Long-term thinking is what separates the wealthy from the rest. They live for the present while keeping the future in mind. So instead of focusing on short-term concerns, think about the long-term implications of your actions as well.
3. Adopt a strategy to choose the best investment and the best place to do it
Don’t blindly invest in anything you find on the internet or in advertisements. Rather than being seduced by the marketing strategy of a specific investment, educate yourself and know where you are going to bring your money.
You need to understand the costs and assess your return on investment. Before you even take the risk, know the ins and outs of your investment. You can refer to the best wealth building assets mentioned earlier in this article.
4. Earn more, save more
After deciding where best to invest your resources, you will reap the rewards in a few years. The idea is that you will earn more from these investments. But earning more doesn’t mean you’ll spend more.
Savings must be constant and growing. Your higher income should translate into a larger savings percentage.
Before you even start spending, dedicate some of your income to savings. The earlier you do it, the better. You won’t be able to accumulate wealth, even with a high income, if you don’t know how to save.
Read this article on how you can save money . This will help you better understand what wealth and income are and how you can live below your means.
5. Be patient
Remember that you will not build your wealth overnight, although you will find various resources talking about making money while you sleep. It will take a lot of hard work and invested resources – time, money, energy.
Not all known millionaires were born instantly wealthy. Many of them have had stories of rags to riches. So you have to be patient to climb the ladder.
Today is a great day to start building your wealth!
Like anything worthwhile, building wealth takes time. It’s not an easy task either, especially in an ever-changing environment. But if the notions of financial freedom, flexibility and control sound appealing to you, building wealth will certainly appeal to you.
Invest in wealth-creating assets such as real estate, private notes, stocks, and bonds . You can also try to find other forms of side business .
You will have to make sacrifices, but you will soon realize that everything is worth risking. In the end, even ordinary people who make the right decisions can earn their first millions.