LOUSE FAIRSAVE – Creating money
DON’T get excited. This is not about breaking the law. We are just taking another step in dealing with risks in creating money.
The richest asset any person can have is the mind. That is because the mind creates money – not by manufacturing actual money but rather by mentally developing successful strategies for generating wealth.
It will help to have some understanding of accounting, markets, investing and the law. Besides that, a person in search of wealth needs to overcome his or her fears and self-doubts. The wealth-seeker needs to take risks, get experience, carefully consider each investment and keep an eye out for opportunities.
But most of all, the wealth-seeker must work on acquiring and building up cash generating assets.
Cash-generating assets are those that can provide earnings as interest, dividends, rents, profits, royalties and/or capital gains.
Robert Kiyosaki, author of Rich Dad, Poor Dad said it too often: “The road to wealth is through striving to increase your monthly cash flow to the point that it exceeds your monthly expenses.”
He defines true wealth as the extent to which you can maintain your desired lifestyle from the cash generated by your assets without having to work again.
By acquiring cash-generating assets, you will be able eventually to get out of the “rat race” and on to the fast track. When one is in the rat race, the dependence on a salaried income limits one’s options. Furthermore, the propensity to acquire what the author calls “doodads” impedes one’s ability to ever becoming self-sufficient.
“Doodads” are cash eating liabilities such as boats, expensive vehicles and heavily mortgaged homes.
The financially illiterate buys “doodads” thinking that they are assets. However, they are really liabilities when they require large sums of cash to continually service them.
On the other hand, cash-generating assets reduce the owner’s reliance on salaried income. The owners of cash-generating assets build self-belief, investment knowledge and bravado with every successful venture or acquisition.
Mind power can overcome self-doubt and the fear of failure. Fear suppresses genius, whereas genius requires technical knowledge and courage. One needs to understand the numbers and have the courage to pursue an opportunity when it presents itself.
Then, too, it does not make sense just waiting for the right opportunity. Many investors fail mainly because they cannot or do not see the opportunity when it arrives. Worse still, they may wait around for the better and surer investment.
The road to wealth starts with the first daring investing step, taken with careful consideration of all the information available. The more experienced and sophisticated the investor, the more opportunities seem to come their way. The market recognises your presence and tests your financial literacy.
Louise Fairsave is a personal financial management advisor, providing practical counsel on money and estate matters. Her advice is general in nature; readers should seek personal counsel about their specific circumstances.