The Wealth Strategy
Did you know that out of 100 people: 1 will be wealthy, 4 will be financially secure, 5 will continue working, 36 will be dead, and 54 will be broke according to the Social Security Administration. Which one will you be? Unfortunately, a lot of people never take the time to learn how money works. A lot of us were taught to go to school, get good grades, and get a secure job. Fortunately, there’s a strategy that you can use to achieve financial independence. I call this strategy, The Wealth Strategy. You can break it down into three parts: high income skill set, turning the high income skill set into a scalable business, and investing into something that gives you high returns.
High Income Set
First, a high income skill set is a skill set that can make you $100,000 a year. A lot of people have jobs, but few have high income jobs. A high income skill set allows you to generate income full-time or part-time. It provides you with security and a peace of mind. Once you have a high income skill set, you don’t have to depend on a company or the government. There will always be a demand for your services, regardless of what the economy is going through. If you have a desire to start a business, you can turn your high income skill set into a scalable business.
A high income skill set is something that you can develop, and then deliver value to the marketplace. Now with a high income skill you’re still trading time for dollars, but you’re trading time for high dollars. Notice I said skill, which is not a job. If it’s a job, then it’s a high income job. The problem with the job is that your value is not determined by the marketplace, it’s determined by your manager.
Scalable Business
A scalable business is something you can grow without a lot of restrictions. For example, an eCommerce store is something that you can grow without a lot of overhead, or a big team. A scalable business is a profitable machine that runs with you and without you. Now you have the freedom to spend with your family. Once your scalable business is making a lot of money, you can invest that money into something that generates a high return.
Scalability relates to how fast a business can grow, and how much earning potential it has. If you look at how a typical business grows its revenue, the revenue goes up and the cost goes up. A company that has a high scalability, their revenue goes up, but their expenses don’t go up as much. This produces good profit margins for a company. However, if the revenue is going up and your expenses just as much you’re not as scalable. What this comes down to is the difference between fixed cost and variable cost. Fixed cost are one-time costs that you have for your business. Variable cost are ongoing costs with every product or service that you sell.
High Return Investment
A high return investment is an asset that generates at least a 10% return or more per year. High return investments build your net worth. A major way to build your wealth is putting your money to work, instead of you working for your money. First, you use your high income skill set to generate a lot of money. Second, you leverage your high income skill set to create a scalable business that produces profits. Now you can invest your profits into something that generates high returns. This is how you become financially independent.
If you want to build wealth you have to invest in the stock market. Most financial analysts and experts would agree that the stock market has averaged over a 10% return since it has opened. Even though many people know this, they still don’t invest in the stock market. Primarily, because they don’t know how to start, and where to invest. A lot of financial experts will recommend you to buy an index fund.
Investing into an index fund is a good thing to do for your future. In fact, if you’re investing into an index fund, you’re already far ahead of the people that don’t invest. One of the most common index funds that people invest into is the Vanguard S&P 500 Fund. It has over $492 billion invested into it. The Vanguard S&P 500 Fund has averaged just over 11% since it was created.
