What Does it Take to Be Wealthy?

For many of us, the ultimate goal is to achieve financial independence and build real wealth so we have the power to do what we want, when we want, with whomever we want, for as long as we want. But how do you get there? What does it take to become wealthy? The truth is that getting rich is simple but not easy. It takes acquiring specific knowledge, defining a clear strategy, and putting in hard work to become wealthy.

What You Need to Know to Build Wealth

There are many paths to wealth, ranging from investing in real estate to building businesses to stockpiling stocks. It is not about having a high income, though having a high income can help. No one can become wealthy by only renting their time out. No matter how much or how little you earn, you have to invest in equity to create wealth. You must invest in assets that grow over time to become wealthy. You might say that’s an obvious statement. Yet if you look at most people’s personal financial statements, most people aren’t applying this lesson. Ask yourself if you are truly putting this principle into practice. How much of your available capital is currently invested in equity? Some examples of equity are rental properties, shares of a syndication for an apartment complex, stocks in a company, and shares of an index fund.

Strategies to Achieve Wealth

If you want to become wealthy, there are three fundamental strategies to consider: 1. Investing in physical assets like real estate 2. Building a business 3. Buying shares in a business. Investing in physical assets is a great way to build wealth over time. Anything that is a hard asset and has the potential to generate cash or grow in value falls into this category. Real estate is the obvious example. But you could buy art, exotic cars, and so on. With real estate, you can buy properties that have the potential to appreciate in value and generate rental income, allowing you to generate passive income streams. This is why so many people like real estate as an investment class. Building a business is another amazing way to achieve wealth. Entrepreneurship gives you the opportunity to create something of value that can generate long-term revenue and huge profits. But it’s important to distinguish between being self-employed and owning a business. Most people who call themselves entrepreneurs are really just self-employed. If you cannot walk away from your business for 3 months with no repercussions to your business, then you are self-employed. Your business owns you, and you don’t own the business. If you are in the building phase of a business, that’s fine, so long as you’re working towards building business processes that no longer depend on you. You want to be very careful that you aren’t renting time from yourself and fooling yourself into thinking you’re financially independent. Because you are not free, you have to keep working at that business to create income. Investing in other companies is also an excellent method of building wealth. This can be a private company. But most commonly, people invest in publicly traded companies. This can be individual companies, an index fund, or mutual funds. The permutations are almost endless. An important distinction to point out is that trading assets does not build wealth; it builds income. For example, flipping houses is a business, not an investment. You are not investing in those properties. You’re running a business. And if the business relies on you to make a profit, then it’s a job. And depending on the phase of wealth building you are in, that can be a legitimate approach to growing your investable capital. But it’s no different than an accountant or a physician who are earning a wage. If they stop working, they stop getting paid. If the house flipper stops flipping, then the income disappears. Trading stocks is another example. Making a profit by actively trading stocks every day is a way to create income. But it’s not investing in the long-term value of the asset, where the asset growth builds wealth over time. Again, if you know what you’re doing and enjoy doing it, then by all means trade all day long. Just understand the distinction that you’ll never become wealthy unless you buy equity with the earnings you have worked so hard for.

The Passive Income Show

I’m excited to invite you to our upcoming show, “The Biggest Mistakes to Avoid When Passive Investing in Real Estate.” Join us for a FREE online workshop on Tuesday, March 28 at 7 p.m. Central Time! We will share insights on the most common mistakes investors make and how to avoid them. You’ll learn valuable tips to help you confidently invest in the real estate market. Don’t miss this opportunity to learn from experienced investors and take your real estate investments to the next level. Register now to secure your spot!