The truth behind building wealth
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JOHANNESBURG - Understanding each of your options on your wealth-creation journey will set you up well to achieve your goals.
Getting the mix right creates the “the real thing”, the ideal wealth creation formula. Here is our view on various choices, based on our extensive observations and experience in wealth management:
* Your business. You may be a visionary inventor, a brilliant entrepreneur or have superior deal-making skills, but you may be wondering how to convert this into a valuable business. And while we’re not in a position to tell you how to conduct your business, we’ve certainly witnessed extremely successful ventures over time, entities which have led to the creation of significant wealth.
So how do entrepreneurs do this? Quite simply: by owning shares in their own business, or shares in someone else’s. Creating a successful enterprise in a growth industry or breaking ground with new ideas and new technology is the first step to creating a valuable business and a strong brand, and becoming a dominant player in any industry. It’s the ownership of the business which creates value once the future earnings potential of the venture has been realised by the market.
* Your career. Your career is your primary source of future wealth. A successful career, either in business or a profession, will reward you with significant income to invest for the future. Highly skilled people and specialist professionals are paid more due to the scarcity of their expertise.
By investing in yourself, cultivating your skills and building your personal brand you will be able to command a higher income level for your services. Once there, be sure to insure yourself against temporary or permanent incapacity.
Even if it’s not your own business, owning shares in the company you work for can also be very rewarding. This step creates capital alongside your normal income. Buying shares or accepting share options in a successful company, be it listed or unlisted, has yielded significant wealth for many.
* Hard work pays. Miraculous rags-to-riches stories where an individual sells their successful business idea for multiples of millions are in reality few and far between. Many business ideas fall by the wayside and only a few survive the long, hard road to success.
The vast majority of wealthy entrepreneurs and professionals simply go the extra mile to achieve their success. There is no substitute for hard work, diligence and patience. It takes many years to create a solid, successful business or a trustworthy personal brand. Intense involvement in your business or career holds the key to your primary source of wealth.
* The business of property. Many a fortune has been made in the property market by skilled property developers, deal-makers and individuals acquiring commercial and residential property for their own account. A key benefit of investing in property is that it has the potential to increase your exposure with borrowed money.
* Lifestyle assets. Homes and holiday homes, a function of your success elsewhere, have proved to be a handy source of wealth creation on a secondary level in the overall portfolios of wealthy people.
* Diversified assets: your proprietary capital. Investing for your own account is one of the fundamentals of wealth creation. Once your business venture or career finds traction and yields significant surplus income, it is essential to invest in a diversified portfolio of shares and listed real estate.
A successful career, investments in quality business assets, property and other financial assets, combined with a decent retirement fund, create a formidable combination for wealth creation - “the real thing”.