Wealth Building

Depending on your present stage of engagement, whether you are looking for a job, employed full time, generating cash flows independently, starting or running a business, or an active investor, our finance pages are designed to accelerate your returns on time invested.

The books, 'Rich Dad, Poor Dad' and 'Rich Dad's Guide to Investing' by Robert Kiyosaki occupy 2 places in the top 10 of the New York Times best-seller list. To invest freely and grow rapidly, being able to take advantage and use the money earned with safety and convenience, you may consider starting a business, and learning how to deal with taxes and accounting.

The rich don’t work for money. Working for a company is a short-term solution to a long-term problem. The long term problem is fear, loss, and ultimately death. Your only real asset is time and intelligence. Capital may come and go, but when you are out of time, boy that's it. Job security isn't going to stack up against loneliness, a bad relationship or marriage, health problems, or car accidents. The rich recognise that by investing in income-generating assets, we can have money work for us instead of working for money. Further, the restoration of your time is worth a drop in earnings, if it comes to that.

Your home isn’t an asset. An asset creates income, and a liability creates expenses. The rich recognise this early on, building a portfolio of real assets rather than committing all their income on a single-family home mortgage. It's great to have a place to live, but don't fool yourself into thinking that your primary residence is an asset. Do this simple test; add up all the income that your home generates for you each month, and all the expenses you incur. If this number is negative, that's hardly a working asset. That's a negative return kids. In most families, hard work to get ahead is just rechannelled into acquiring liabilities instead of assets. The rich, however, focus on acquiring assets. They recognise the power of income generation from investment. They recognise that their money can work for them to break the chain of working for money.

The rich combine financial IQ and the courage to take advantage of emerging opportunities in the world.

Long-term, wealth-oriented people must overcome fear, laziness, cynicism, bad habits and arrogance. Money has a nasty way of dwindling once it is made, unless you manage wealth and personal affairs wisely.

Traditionally, when salaries were high relative to living costs, and the society was more stable in general, it was a sound plan to get educated, find a safe, secure job and earn a salary from a big company or the government, counting on health and retirement benefits. This is the path we’re educated into following as a safe route to economic security and comfort. With fast-changing economic insecurity, however, this may not be good advice in today's world. The rich follow a different path. Instead of working for their money, they learn how money works so they can make it work for them. That sounds like a cliche, but there's some truth in it.

In Rich Dad, Poor Dad, Robert Kiyosaki makes the excellent point that amassing capital through whatever means, even saving if necessary, and trying one money-making idea after another, even gaining nothing more than hard life-lessons through the effort, will result in the dawning of financial and wealth-literacy. This undervalued and unstressed skill is sorely lacking in the traditional school curriculum. As much as is possible through lectures, text, and real-world assignments, you can learn enough to start taking your lumps. You're only a few failures away from your first positive cash-flow, so get studying, work on that first savings, the amount according to your plan, and try your first micro-business. Online is best, but side-of-the-road is tried and true, as is concert parking-lots and music festivals. Auctions are nothing to sneeze at, although finding an auction that isn't well-known ifs a small feat on it's own. Try police, fire marshall, GSA government, Salvation Army, municipal, charitable organizations. Hold a yard sale. Do hauling and sell trash you find at the flea market for $3 each. People will buy anything if it's cheap enough, and in OK condition.

Kiyosaki gives assets a simple defining rule: Assets create income; liabilities create expenses. It's as simple as that. Don't complicate matters. You want to be rich? Go out and make some money by selling something for more than you paid, or offering a service. If you can wheedle out a buck, then rinse and repeat a thousand times. It isn't as hard as you think, or anyone says. Business is easy. The challenge is yours. Look around with a critical eye. What do you see? Where is money being made. Take any store that is around you. Do they make pizzas? How many employees, how much is the rent, where do they get raw materials. I don't mean that everyone should start a small business. What a nightmare. Too many details, and yesterday's news besides. Main street is all online these days. Can you program, make a website, start a YouTube channel, offer a skill or service? Market yourself.

It’s not how much money you make. It’s how much money you keep. There is a simple distinction to be made here. Employees working for corporations earn first, pay taxes second and spend last. Business owners with corporations earn first, spend second and pay taxes last. This allows the latter to manage their tax liability and pay themselves first. The rich take full advantage of the tax system that is in place for their benefit. Working people and the middle class absorb the biggest tax burden while the rich use corporations to lower their tax burden. A dollar saved is a dollar earned.

This is a critical issue because you will come across many highly educated but financially illiterate people. The result of their high education but financial illiteracy is that they fall into the conventional spiral. They buy a house which is too expensive, instead of starting an investment portfolio. In turn, they lose time, additional capital, and even financial education. The opportunity costs are substantial.

The pattern of treating a home as an investment is the foundation of our debt-ridden society because it creates a spiral of increasing liabilities as we upscale. Rich people acquire assets. The poor and middle class acquire liabilities that they think are assets. But the truth is that as an employee and a homeowner with a mortgage, you work for the company, you work for the government (through taxes), and you work for the bank (through interest).

The rich focus on their asset columns while everyone else focuses on their income statements. The simplest way to riches is to keep expenses low, reduce liabilities and build a solid base of assets over time. Kiyosaki defines real assets as businesses that don’t require your presence, stocks, bonds, income-generating real estate with a management team and maintenance staff, royalties, and any other passive income-generating investments.

It would be wiser moving forward to look at tax rates and benefits of expensing as a limited liability company (LLC), using smart contracts on blockchain ledgers that execute automatically. Use local banking and pay taxes with good accounting, also allows other businesses to value our company based on multiple years of growth and earnings, and that just isn’t possible without reliable financial records.

RICH MINDSET & HABITS