10 Strategies to Build Wealth
Financial Freedom my only hope
Fuck livin' rich and dyin' broke
I bought some artwork for one million
Two years later, that shit worth two million
Few years later, that shit worth eight million
I can't wait to give this shit to my children
~ Shaun Carter, 4:44 (2017)
You're just going to give me five hundred dollars and I only have to pay ten dollars a month to maintain it? This was my first foray into the world of credit, at the tender age of seventeen. Back to school was around the corner and Mark Ecko had just released his joint venture with Marvel comics. This line of clothing was a comic geek's wet dream. I snapped at the idea of getting all this clothing and not having to pay upfront. I wish I knew the repressive bonds of financial slavery would begin with this innocent purchase.
I spent most of my young adult life in debt based on this one decision. This financial incompetence would only help to bury me farther into the depths of trapping my mind. Even with well meaning parents, one, a credit consultant and the other, a doggedly saver. They failed to impress upon me the importance of financial mastery early enough. My aim is to reach as many of you as possible before its too late. Life is far too short to be fretting over minimum payments and avoiding pesky creditors. I formulated this list, which is in no particular order, of a number of things I learned throughout my journey with credit and wealth management.
1. Life/Critical Illness Insurance
A little known secret to the general public is that life insurance can propagate wealth forever. If you've ever heard the adage, "the only two things guaranteed in life are, death and taxes", you'll put this to the forefront of your thinking. You will die. This is just a reality of life. What you leave behind could be a profound legacy to help or hinder your offspring. Taking out a substantial life insurance policy is essential not only to cover mortgage, debts, burial costs and the estate, but also places your children in the position to jumpstart their lives.
Critical illness insurance is a living protection against an ever growing amount of illnesses that may hamper you from being able to work. Everyone believes that they're completely healthy and nothing can ever happen to them, until it happens. By this time, its too late and you're strapped with committing huge assets towards compensating for your loss of wages. Be proactive in both respects and you'll be thanking me later.
2. Shelter your money
Your prime-age working years (ages 24-54) should be used in portion towards creating a nest egg for yourself. I would go you one better, I'd start even earlier. My first job was a paper route, at 10 years old I entered the work force. Understand that a child has no concept of money. Take half of their paycheque and put it into something that will grow. A registered retirement savings plan (RRSP) at age 10, contributing $50/month would yield over 10K before you even entered your prime-age working years. Thats passive saving, think about that.
Tax-free savings account is just what it states, an account that allows your money to grow tax free. An excellent route to take if you've maxed out your contributions for your RRSP. The goal here is to keep as much of your money as possible. You don't want to rely on anyone for your retirement.
Find a cause larger than yourself. Paying it forward with an open and honest heart will bear dividends extending further than your could possibly fathom. If you've ever been in a dire circumstance where a helping hand could have made changed made or broke you, you know why this is important. I love giving to charity...and I'm not rich! There's a few causes I champion and I show them (after first doing my due diligence) with contributions. Government also views charity in a grand light and gives your a tax credit for being a great human.
4. Dollar Cost Averaging
This principle works well with mutual funds and stocks. If you delegate a certain amount of money per month towards a mutual fund or stock, regardless if the stock is up or down - this is dollar cost averaging. This is a long-term principle and should be watched, at least once a week to see how the stock is doing depending on when you've set your withdrawal date. This could also go towards your retirement fund if you pull at the correct time. This could mean any amount of years prior to your retirement if your stock is red hot and you know you're leaving the workforce in a couple years.
5. Calculated Risks
Be bold in your risks, but never risk more than you're willing to lose. A sure thing in life is "make believe", completely fictional and should be viewed as such. This doesn't mean you shouldn't taste every flavour until you find the delicatessen that suits you.
I coulda bought a place in Dumbo before it was Dumbo
For like two million
That same building today is worth twenty-five million
Guess how I'm feelin'? ...Dumbo
6. Passive Income
This is that special sauce, the one that hits the spot. These two words are magic to my ears. There are a number of ways to amass passive income. To name a few, flip a house, multi-level marketing, rent out an Air BnB, just to name a few. This is the type of income where you make money while you sleep. It takes little to no maintenance and can be expounded upon by just looking for opportunities to fill a need.
Less is more. Don't be allured by the flashing lights, there will always be a new gadget to separate you from your money. Buying depreciating assets like jewellery, new cars and the latest smart phone is a fool's errand. Minimalism is a Buddhist mentality that I incorporated into my life years ago and has given me much happiness. The less "things" you have, the more you can concentrate on what you need.
8. Line of Credit
This is a security blanket, simply for use in the case of an emergency. I was taught this early on by my parents. One of the truisms in life is that something will always happen to throw a monkey wrench in the best laid plans. Murphy's Law. Having the peace of mind that comes with a few grand just sitting there will alleviate some of the stress. This one is pure preference, some may not want to take on the extra credit.
9. 40 Laws of Power
This is an invaluable book to learning how cruel the business world can be. Full of cunty, self serving assholes whom just look at the bottomline. In a world where this is becoming the norm, at least in the Western hemisphere, it pays to keep an ear to the street. Read this book, understand its principles and defy them. This will allow you to detect when someone is attempting to pull the proverbial wool over your eyes. Be keen to their attempts and play your cards close to your chest.
10. Use credit cards
This may sound counter-intuitive, but hear me out. There are great benefits to using your credit cards, a variety of them offer a cash back or travel incentive. This works two-fold, helping to build your credit and also giving you money back for something you would of purchased anyway. This is a strange bookend as I did tell you that my ignorance with credit is what started this spiral initially. The trick is to pimp the system and not be tricked yourself. Do not keep a balance, be sure you have the money to pay off your debt immediately. Keeping your account in good standing will also go a long way to requesting you get your annual fee waived. This is a zero risk tactic, if you employ it correctly.
The most important item I can impart is that you continue to learn. There's always new and innovative ways to lawfully build an empire for you and your family. When your financials are soundly squared away, it becomes much easier to complete the things that are really important in life.