PHUKET: I am often contacted by people without massive amounts of cash asking me what they can do to prepare for the future. Early in my career I tended to take the approach most people in the industry do, which is to focus on the rich and let everyone else know that you are sorry about not being able to help them. I have written many times that I believe that insurance-based savings plans are rubbish, so I typically advised people on small incomes to set up a separate account and save cash there, or get a discount brokerage and dollar cost average into index ETFs (exchange traded funds).
The problem with this approach however, is that unless someone can develop a large enough income, saving peanuts year after year will still result in nothing but a bigger bag of peanuts. The real solution to building wealth is to build a large enough income stream. May people are too afraid to step outside of their comfort zone when it comes to building wealth, but if you manage the risks correctly anybody can end up with multiple streams of income. This is the real key to building wealth, and of course if you can build passive income streams, what you can achieve becomes unlimited.
A good book to start thinking about building income streams is “Rich Dad, Poor Dad” by Robert Kiyosaki, the single best selling personal finance book in the world. His other books are great as well. “Cash Flow Quadrant” and “Business of the 21st Century” are two I also recommend that will greatly help improve your mindset about ways to build wealth.
Distressed income property is a good place to start for many people with limited means. When a buyer needs to sell quickly, you can often get a substantial discount in a property’s price, which means you can arrange financing with a bank with less capital tied up. You also may be able to arrange financing directly with the seller. Many developed countries will allow foreigners to buy properties with no money down if the price is right, and then you can get your tenants to pay off the mortgage for you. This is just one of the examples of the many different ways Mr. Kiyosaki built his own wealth, and I would read up on the subject and seek the advice of some people who have actually done it, before taking the plunge yourself.
I love coaching people on starting new small businesses, or helping them develop income streams. It is far more exciting than helping the rich save taxes. I often tell people I am a health and money coach, because to me health is our greatest wealth. If we really want to be wealthy, we need to learn how to systematize the way we make a living so we can spend our time with our loved ones and taking care of our health by maintaining a physically active lifestyle. Income should be passive; lifestyle should be active.
There are many ways to build up passive income streams. Some are relatively quick, others are slower. There is no need to reinvent the wheel though, study what others have done and craft a plan. It isn’t that it is difficult to do, it is just that most people aren’t willing to educate themselves and step outside their comfort zones. If you are, there are endless opportunities to build long lasting wealth that you can pass on to future generations. The key is to start now. It doesn’t matter how small you start, just take some form of action, even if it is simply buying one of the books mentioned above.
David Mayes MBA, resides in Phuket and provides wealth management services to expatriates around the globe, focusing on UK pension transfers. He can be reached at email@example.com or 085-335-8573. Faramond UK is regulated by the FCA and provides advice on pensions and taxation.
— David Mayes
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