The Only Way How to Make Money so the Money will Make You
Investments Which Can Pay Your Wages
If your goal is to leave work forever, to live the life you've always dreamed of, the chances are that you need to change the way you think about investing. It took me a while to figure this out, but once I did, it changed everything.
Traditional thought about investing is that you do it to acquire and accumulate assets. This means that at the end of each month, or year, you count up the value of your shares, property and other investments, and if they are worth more than the last time you counted, you are doing well and you strategy is working. This type of strategy is called "Wealth Creation".
The problem with this type of investing is that there is no clear point where you can say "I've made it, its time to live". You just keep working, accumulating and counting. And it gets addictive. Its nice seeing those figures get bigger. And the bigger they get, the nicer they feel. So in the end you end up working forever, just like everyone else, purely to keep the numbers getting bigger, so you can feel nicer about them.
I used to invest like this. Not anymore. I don't count what I have anymore as the figure no longer has any importance to me. So what do I do now? Its simple, I invest to earn my wage. At the end of each period, (I actually count mine over the financial year) the figure I count is how many month's wages I was able to pay by the returns on my investments. If this year I had more months covered than last year, that's when I know my strategy is working.
And as for the problem above of working the point where you can say "I've made it, its time to live", its simple. When your investments earn you 12 months wages, plus a bit more, you've reached that point. This is the point where your investments will pay for your lifestyle, and keep growing year in year out. This is the point where you can kick back just like you always wanted to. The only thing your really need to decide is what "plus a little more" means to you, which will depend on your lifestyle, aversion to risk and a whole lot of other factors. But I'll leave that for you to work out.
Most people would read this and laugh. 12 months wages from investment income, ha! Thats impossible!
Here's the thing, its not impossible. We've found two great strategies which focus investments to earn income, one trading shares on the stock market in a very safe fashion, the other trading currencies on the foreign exchange market. Click through the following links to read all about them:
And one final point about changing your thoughts about investing to pay your wages. This is the one reason I believe an "income strategy" is so much better than a "wealth creation" strategy. If you concentrate on developing investment related income to pay your wages, and continue to re-invest your returns until your annual investment income equals 12 months wages, plus a little more, your wealth creation will take care of itself. Each year, you'll pay yourself your 12 months wages and then that "little more" will be added to your estate, continually adding to your overall wealth.
Financing Investments Through Borrowing
There is a commonly held perception that you need money to invest money. Which by and large is correct. There are a number of methods of how to accumulate more money in our Business Opportunities page. However, borrowing to invest in appreciating assets is definately worth considering too. There are many advantages, both for investment and tax reasons, which make it quite an attractive idea.
It is very important if you are considering borrowing to invest, that you seek the assistance of a financial advisor or accountant. In fact, its important you have such a person as part of your team of expert advisors period. (Here's an article about developing your team of experts) So make sure you consult with someone you trust.
Having said that, I certainly borrow to invest. In my situation, all the interest and costs associated with borrowing are tax deductible, and it gives me the ability to increase my exposure and therefore investment related income. Because of this, I have developed a page on this website to discuss financing your investments through borrowing. Click through here to view this page.
