I always say, “no one ever got rich by earning and saving.” As most of you know, traditional savings accounts yield low interest and don’t increase your wealth in any significant way. However, most of us aren’t taught about building wealth through passive income or how to invest in assets. Most of us, in fact, are okay with earning an hourly or salaried wage. Now, there’s nothing wrong with that if it’s what you would prefer to do. But, I want to give you some information on what assets are and how you can cultivate wealth.
Investing 101: Real Estate Assets
First things first
If you haven’t read my book Money Mastery or heard of my Triple X factor, I encourage you to start there. You should really only begin to invest in assets when your debts are paid and you have some extra income you can siphon off to invest. Additionally, I encourage you to have 3-6 months of savings in case anything unexpected, say a global pandemic, were to crop up and leave you without a job for a little while. If you’ve got those boxes checked, let’s move on to the next step!
Identify your winning percentage
The real key to building wealth is learning to invest your excess capital. First, start by identifying a percentage of your income that you don’t need for bills or necessities, that you can begin saving for investments. I call this your winning percentage.
For some people, it may take two, three, or even four years to reach a point where they have any excess capital to deploy or invest. That’s okay. Stay with it, and you’ll get there!
When you begin, you’re probably not going to have enough money to put a down payment on a piece of real estate. But you will have enough to open a savings account. With consistency and patience, you’ll build up enough money to purchase either your first house or a rental property.
Invest in a proper asset
I have several teachings on how to find the best properties to invest in. The biggest tips I can give you all relate to cash flow. If you have bought a rental property, which I think lends to the best long-term cash flow, then you should be earning at least $300/month in extra cash flow. That may not seem like a lot to you at first. But, if you have several properties, you can see how it adds up quickly.
If you would rather fix and flip properties, I have some teachings on that as well. Keep in mind, this is a more turbulent investment, but many real estate investors find this works for them.
The Snowball Effect
The more of this type of investment that you can accumulate, the more the snowball will start rolling in the right direction.
The good news is that as you build wealth, your cars and mortgage will be paid off. The beauty of this is that when your house and cars are paid off, it doesn’t cost a lot to live. Your expenses will continue to come down, and you will have more freed up cash flow.
We are taught to think that building wealth is difficult. The only people with real wealth are the people that were born with it or the people that were lucky enough to stumble into it. Nothing could be further from the truth. You can build wealth, and you can start right now! What is your first step? Let me know in the comments below!