How to Create Wealth
Copyright 2006 Timothy Rohrer
Most people say you need money to make money. In reality, it is
not about how much money you have, but how you spend the money
that matters. There is a distinct difference in how the wealthy,
the middle class and the poor spend their paycheck. Generating
wealth is a mechanical process believe it or not. People tend to
take the whole concept of wealth and spin it into this complex
formula that requires hard physical labor or long hours behind a
desk. The truth is that the formula to create wealth is so
simple it's almost unbelievable.
Before we begin, it's important that we understand the correct
definition for the words liability and asset. A liability is
something that we pay perhaps on a weekly basis, a monthly basis
or even annually, such as cars, boats, and houses. Yes, a house
is considered a liability because it is a monthly bill. Assets
are things that pay us money. Some examples of assets are:
stocks, bonds and rental properties. Please keep in mind that a
house or rental property is only an asset when it begins paying
you.
Each week the wealthy, the middle class and the poor receive a
paycheck. How we spend our money determines our success in life.
The poor spend their paychecks on rent, taxes, food, clothes,
and other miscellaneous objects that end up sitting around
collecting dust. The middle class spend their paycheck on house
mortgages, boat's, cars, snowmobiles or anything that has a
monthly payment attached to it. Ultimately the middle class end
up acquiring so much debt they begin paying off one credit card
with another, before they know it they are looking into debt
consolidation, then to refinance their home and eventually
bankruptcy if they are not careful. Sound familiar? The wealthy
take their paycheck and spend their money on investment vehicles.
The first thing that comes to most people's minds when they
think of investment vehicles are stocks and bonds. However, an
investment vehicle is simply a method of transportation to get
from point A to B financially. It does not matter if you are
driving a Dodge or a Mercedes, all that matters is that you are
able to get from point A to B. For example, John may choose to
invest into the real estate market while Susan decides to begin
a business venture with a close friend from college. While both
John and Susan are using different investment vehicles, they are
both trying to get to point B.
The truth is you do not need thousands upon thousands of dollars
to begin making money. All you need is a few investment vehicles
that offer the right opportunity. The only challenging part is
finding the right ones that work for you.