GUARANTEED SECRET OF WEALTH
In late 1992, I stumbled across a concept I now call the 'Guaranteed Secret of Wealth.' This concept came to me when I was reflecting on investments that had worked for me - and a few that had failed. It suddenly became obvious to me that money is like time: you can either use it wisely or let it fritter away.
Most of us go through the same process:
- We get paid.
- We pay our bills.
- We spend what's left over.
This leads me to the concept of the 'Guaranteed Secret of Wealth'.To become wealthy you must religiously set aside a percentage of every dollar you earn - and then invest your savings in secure appreciating assets.
What is the best way to invest this money?If you are paying off a home loan now, and contributing to superannuation, you are already on the right track. However, to speed your wealth-creation process you could pretend the interest rates have risen, and raise your loan repayments accordingly. (Try increasing your repayments by 10%-20%.) As well as giving you a safety buffer in the event that rates do rise, this will save you many thousands of dollars in interest.
If you have paid off your home, you should commit the money you were making in repayments to an investment program. Time and time again I ask my seminar audiences to raise their hands if they've paid off their homes. Usually, plenty of hands are raised. I then ask the clincher, "Leave them up if you are now investing the money you were previously contributing to your mortgage payments".
The arms drop and there are sheepish grins everywhere. Yes, they intended to invest the money but somehow they never got around to it. Now, three or four years have passed, and the $600 a month has seemingly vanished! Potentially, $20,000 to $30,000 have slipped through their fingers.
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