Creating wealth is something most of us aspire to do, but few truly know how to do it. It seems that only the lucky few are able to truly make it big. That said, financial experts agree that there are seven specific laws that govern wealth creation through investment. By applying those laws, the chance of building true and lasting wealth is significantly increased.
Law #1 – You Have to Believe in Yourself
While a lot of people find books such as “The Secret,” by Rhonda Byrne esoteric and flaky, there are some truths in those books. The only way to ever become wealthy is to believe that wealth is within your reach. Only if you truly believe in yourself will you go out and get what you want.
Law #2 – Have a Written Plan
If someone is trying to start a business, first and foremost, that person has to write a business plan. This plan highlights how much money is needed now to become profitable later. It looks at projected incomes and outgoings and effectively lays out a blueprint for the next few years. To create wealth, you must learn to do this not only in your profession, but in your personal life as well.
Law #3 – 10% of Your Salary Is for Wealth Investment
Regardless of how much you earn every month, 10% of that must be put aside. This is the money that you will use to create your wealth of the future. How that will be created will vary from one person to the next, but by consistently putting that 10% aside, you will be able to gradually build it.
Law #4 – Choosing an Investment
One of the biggest decisions of your life will be what to invest in. Having a diverse portfolio is very important, as it means you have not put all your eggs in one basket. One area where you may want to concentrate some of your investments is the real estate market. With interest rates at an all time low, it is now a borrower’s market, just waiting for you to take advantage of it.
Law #5 – Focus on the Laws of Compounding
Compounding, according to some, is the most important principle when it comes to wealth creation. It essentially means that you earn money on the money that you have, or, if you have enough, to earn interest on the interest that your money makes. This is the type of money that makes itself, without you having to work for it.
Law #6 – Leverage Your Assets and Your Income
This basically means that you use your current margin to improve your return on investment. For instance, if you own a property, you can improve on it and then sell it for a profit. At that point, you will have leveraged both your income and your assets.
Law #7 – Create Wealth Slowly
We’ve all heard of stories of people who became rich overnight. Unless you win the lottery or inherit a large sum however, this is unlikely to happen. Instead, start small and slow. For instance, buying small properties is currently very smart, as you are most likely to sell those easily for a larger profit later. When it comes to creating wealth, it is actually small steps not large leaps that tend to result in success.