Read about my successes and failures. Learn from my experiences and gain insight without losing any cash!!!
Lesson: Catching a Falling Knife
Lesson: Currency Exchange
Lesson: Mutual Fund
Lesson: Paid to Wait
Lesson: Pricing in a Downturn
This is where you’ll find find my Blog. I will comment on the latest news relating to investing, real estate, and the financial markets.
How do you become wealthy for life? The answer is to understand the definition of wealth and to continually work towards it. Most people think wealth is either how much money you have in the bank, or how many nice things you have, or how big your net worth is – well it isn’t. Can a factory worker be wealthier than a wall street broker or CEO? Yes, and it is because very few people understand the wealthy for life equation.
The key to the wealthy for life equation, is that you should measure wealth as a time based function. In simple terms this means that your wealth should be measured in some form of time. Like days for example. If your equation works out to infinity you are wealthy for life! This is so important I want you to hear it again – if your equation works out to infinity you are wealthy for life!
Take your cashflow sheet (link to cahflow sheet article) and look at your monthly cashflow. Now take away any money that you earn by physically doing work or showing up to work somewhere. Basically you want to treat the equation as if you didn’t work again, and you want to know if you can survive forever.
If your cashflow is negative, you are not wealthy yet – but don’t worry, you can be if you keep working at it. To see how wealthy you are, total the amount of income from assets (not your job!), and subtract your expenses. Most people won’t be able to last much more than one week. But, if your cashflow is neutral or zero – you are very close! At this time, if all your expenses stay the same and you only spend what is in your budget, you will be wealthy for life. This means you have wealth throughout the remaining time in your life. But, the truth is, that if you’re cashflow neutral, you’re not really done, because gas prices might increase, and the cost of living will increase etc. This delicate balance can be easily thrown out of whack, so, you’ll want to achieve a positive cashflow number in your cashflow sheet. This means that you’ll have more money every month than you need to spend every month. This surplus can then be invested to earn more money while you wait for prices to increase. When they do you’ll be ready. Wealth is a lifelong commitment. It is rewarding and fun to become more and more wealthy every month, so why would you ever want to stop! How do you know you are wealthy for life – follow this calculation and work towards infinity!
Much of this technique is based on Rich Dad, Poor Dad by Robert Kiyosaki, follow the link if you want to learn more about how to earn money from assets.