The Holy Trinity of Wealth Creation
I’ve been teaching my strategies and helping people take the first scary steps into property and share market investing since 2002 and I’ve heard just about every reason known to mankind as to why people want to attend my Wealth Wisdom courses.
Needless to say, they want more money; they want to be rich. Yet almost without exception all of them were focusing on the wrong thing.
The Holy Trinity of Wealth is completely intertwined — it’s very difficult to create one component without the others.
Wealth is really about long-term security. It’s about knowing that no matter what life throws at you, you and your loved ones will be financially secure. For most people it is the freedom, security and comfort that goes with having money that they really seek. With that in mind the best wealth-generating tool for long-term prosperity is property.
You can get started in the share market for as little as a few thousand dollars. Growth investing is where the real money is and, in particular, value investing for growth. I am a value investor and you will be, too, once you’ve read this book. And if it makes you feel better, Warren Buffett, the most successful investor of all time, is also a value investor.
Value investing is fundamentally a growth strategy but one that is conservative in approach. There is no speculation or high risk involved. A value investor simply searches the share market for undervalued shares with growth potential and buys them. This way you increase the growth potential by buying the asset at less than it’s worth.
By diversifying your interests across asset types you can use whatever investment vehicle you choose depending on your current situation. For some people, however, the dream ends here because they are already struggling to keep their heads above water.
But what if I told you that you can easily get around that issue, too, by choosing a different vehicle again for investing?
If you are to successfully create wealth, you need to create income. For most people, even if they are working hard, this is the major stumbling block. If you are like many of my students, you’re already working as hard as you can, you’re taking care of your families and you’re trying to set a little aside for a rainy day. But often it’s not enough. Even saving a deposit for their first house can be a tall order for many.
So I wondered … was there a better way? Was there a way that ordinary Australians could create additional income for themselves, without having to sell their organs or their souls, so they could kick-start their investment dreams? And I’m here to tell you there is — contracts for difference (CFDs).
To give you an idea of the power of CFDs, one of my students, Geoff, immediately launched himself into CFD trading after one of my programs. He started off small, as I recommend, just until he got his confidence. Within a week or so, he was making a 20-30% profit most of the time. In one afternoon he made $1302 profit. Imagine doing that two or three times a week — how quickly would you be able to buy more shares and more property?
The Wealth/Income Paradox
People want wealth but they focus on income. But income will not make you rich.
As a consequence of this misunderstanding, too many people mistake trading for investing. If you buy shares and trade them constantly, or have visions of scanning charts and trading your shares by lunch time, walking the dog and then going to play golf, you are not investing, you are trading. You are, in effect, creating income not wealth. If you buy property or want to buy property and have dreams of renovating and selling, then you are trading property — you are not investing.
Trading is a fantastic way to create income, but it has to be seen in light of the Holy Trinity of Wealth, not in isolation. What confuses most people is they see wealth, growth and income as separate entities and they are not. They are different, equally important parts of the same puzzle. You need to create income so you can invest in growth shares until you accumulate enough cash to buy property. By following the strategy laid out in this book you get all the pieces of the puzzle you need — not just bits of it. You will learn all about the property market and the share market, about shares and their derivative products, such as CFDs, which can be used to create income, which is where it all begins.
It’s not how much money you make that will determine your net worth, it is what you do with what you make that will determine your net worth. Invest in property for wealth. If you can’t do that right now, then invest in shares for growth.