If you’re like me, you’re probably sick of hearing about coronavirus all the time, so good news!
Today’s episode won’t be about the coronavirus.
Instead, I’m going to teach you about wealth accelerators.
If you don’t know what those are, you will know by the end of the show, and you’ll understand how wealthy people use them to keep getting richer.
Then I’m going to have a chat with Pete Wargent about how Australians aren’t moving much anymore.
The rich use these 7 wealth accelerators to keep getting richer
Do you understand what a wealth accelerator is?
Well, maybe you should … because that’s the way the rich keep getting richer.
Now you’ve probably heard the expression money begets money.
Maybe you've even wondered why it's easier for people who already have plenty of money to make more of it.
Or maybe you’ve wondered why making your second or third million is much easier than it is to make your first million dollars?
Strategic property investors who have built a true property investment business, grow their wealth faster by using a number of what I call “wealth accelerators” that leverage their returns.
Let's look at them….
- Other people’s money
One of the biggest differences between how the rich and average Australian go about building wealth is how they invest…not their own money, but how they leverage and use other people's money.
The wealthy have mastered the art of using money they don't have to build their wealth.
They used borrowed money to magnify their investment activities and enjoy accelerated returns by borrowing and leveraging against assets they own and use this to acquire even more assets.
- Other people’s time
While many beginning investors waste time, energy, and effort trying to do everything themselves, successful investors put their time to its highest and best use.
Some beginning investors believe they’re saving money by doing their own research, spending weekends house hunting, and competing with agents undertaking property negotiation.
However, their lack of experience usually means they get a secondary result and pay a huge learning fee to the market by paying too much for their property or buying the wrong property and missing out on significant future capital growth.
- Legally take advantage of the tax laws.
Believe it or not, the tax laws were written to benefit business owners, meaning if you run your property investments like a business you're able to accelerate your wealth creation by taking advantage of these laws.
Essentially, as an employee, your cash flow is a bit like this…. You earn money, you pay tax, you spend what's leftover.
However, as a business owner, the pattern is quite different. You earn money, you can spend it on legitimate expenses associated with operating your business and earning income, and then you pay tax on what's leftover.
- Correct ownership structures.
Another wealth accelerator used by the rich is their ownership structures.
If you choose the right ownership structures for your investments you can accelerate your wealth.
Sophisticated investors own nothing in their own name, or very little in their own names, but control everything in structures such as companies and trusts.
- Their network.
Successful investors realize they don't have to be an expert in every field if they develop a good network around themselves, including a smart finance broker, good solicitor, a property savvy accountant, and a knowledgeable property investment strategist.
Having a great network around you enables you to leverage off other people's expertise.
Your network of relationships is critical to growing your wealth, not just for what they know themselves, but often for the people they know who could help you.
- Their mindset.
Another leverage point that makes the rich richer is the way they think - their mindset.
They just think differently to the average person.
The not so rich have a different reality to the wealthy.
To put it simply, your reality is what you think is real, which means your perception is your reality.
So if you want to truly become wealthy, you're going to need to open your mind to a whole range of new ideas.
- They own the right assets.
When you look at the various rich lists you’ll find that most wealthy Australians have either made their money through property or if they’ve made it through other business ventures they invested the bulk of their money in real estate.
Choosing the right property, owning it in the right structures, financing it correctly so that you can use more of other people's money, using the tax laws wisely to pay minimum tax and understanding the law to protect your assets, vastly accelerates your wealth creation.
Here's another interesting thing about these wealth accelerators…
Combining two more of them doesn't just speed up the growth of your property investment business incrementally. It helps grow it by quantum leaps.
So now you understand the wealth acceleration secrets of the rich.
Some of the highlights from my chat with Pete Wargent:
- Research has shown that homeowners are hanging onto their homes for longer than they used to
- Even though young people might be changing jobs more frequently, they tend to hang onto their homes
- The longest tenure is for houses in Sydney and Melbourne
- The costs of buying, selling and moving discourages people
- The population is aging, and Baby Boomers are staying in their homes as opposed to downsizing or moving into retirement homes
- There are limited medium-density homes for retirees
Links and Resources:
Join us at Wealth Retreat 2020 –find out more here
Pete Wargent’s new book Low Rates High Returns
Some of our favourite quotes from the show:
“Successful property investors make the most of their time by leveraging other people's time.” – Michael Yardney
“When you become aware of the tax laws and the deductions, you can maximize your income and legally minimize your tax.” – Michael Yardney
“The fact is, what stops many people from becoming successful isn't what they don't know. It’s what they think they know, which actually isn't so.” – Michael Yardney
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