Tag: Wealth

CategoriesActionPropertyReframe your thoughtsTime

Property Can Make You Wealthy

Posted on April 2, 2022

Prices can make your mind make funny justifications. It’s not prices on their own though. It requires your bias and your emotion. And without thinking, you can end up on the wrong end of the stick.

There are many reasons not to own an investment property. People will share these with you whether you ask or not.

But a property in an area that is reasonably desirable, or is likely to continue to grow, can be an excellent investment.

For example, in the UK, property tends to double in value, on average, every 10 years. So, if you buy a £600,000 property with a £450,000 mortgage (75% loan to value), it should be worth about £1.2 million in 10 years and £2.4 million in 20 years.

Imagine that. One property that you put £150,000 down on as a deposit, could be worth about 4 times it’s current price in 20 years. That would leave you with nearly £2 million in equity.

That’s more than 10x on your money. You may also have received some rent in that time period too. Add that into the mix.

Now imagine that one property helped you buy two more at £800,000 on the 10th anniversary. And they went up similarly. And their mortgages stayed static. You could have about £4 million in total equity after the 20 years. Just three properties could change your life and whole financial circumstance.

Think it through. Or ask. But make it work for you. Because property can make you wealthy.

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CategoriesPropertyReframe your thoughtsTime

Build Generational Wealth

Posted on July 27, 2021

Have you got a money plan? Do you have a clear and precise written plan for your future or just a general idea? To build generational wealth, you will need to be specific and intentional with your plans.

The main thing holding you back in this era is your mindset. Secondly, it is your follow-on actions. Arguably you can be doing the right actions with a poor money mindset. Although, the mindset usually comes first before the motivation and actions. Regardless, it is better if they are both aligned.

Are you earning money only to pay for your current lifestyle? Or are you earning, saving and investing for now and for ‘retirement’. Ideally you are earning, saving and investing, with thoughts of your years ahead without an active income. And then ultimately, it would be great if you were preparing to have sufficient investments remaining to leave in an inheritance.

Preparing your finances is an important item on your to do list. The earlier you start, the stronger the habit will be. In addition, you are much more likely to have more money for yourself and for your heirs, the earlier you start.

Get a separate savings account set up. Place some money in it every week without fail. Learn about investing. Take it seriously. Though you can make it fun and interesting too. Begin investing for the 20, 60 and 140 year horizon.

Build generational wealth.

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CategoriesActionFinancialObserveReframe your thoughtsTime

The Power Of Compounding

Posted on June 11, 2021

Following on from the last few days, I’m combining retirement thoughts with compounding. The power of compounding is quite incredible.

I read an article recently about setting aside almost $3,000 for a child when they are born. This money could come from parents, grandparents, uncles and aunties or even from crowdfunding, I suppose.

The idea was that you could put that $3,000 into a low cost S&P 500 index fund and just let it sit there for 65 years. You would not take any out, nor would you need to put any more in. You would just let it roll over and compound.

Using the figures from the article, it noted the S&P had delivered an average annual return of between 10% and 11% in its nearly 100 years of existence. If it continued to average that rate, or even a little less (9.5%), the account would be worth over $1m by their 65th birthday.

This is more than 90% of what people would have in their retirement savings. By doing this one thing, during pregnancy or within the year after their birth, you would set them up for retirement. Regardless how their financial habits developed, they could always count on their $1m retirement fund when they turned 65.

The power of compounding is compelling.

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CategoriesActionFinancialReframe your thoughts

A List To Strive For

Posted on November 17, 2020

There is always a list we want to get on. It could be Santa’s list or the shortlist for a sports team or promotion. There is always a list to strive for.

On that note, I found a list which I found interesting. It made me think, of all the lists you could be on, this would be a good one. Particularly if you were speaking in terms of wealth and influence.

The list was of the “Greatest philanthropists by amount of USD”. Now you may argue over the term “Greatest” so perhaps the people would be better described as the “Highest donating”.

Anyway, rather than the Sunday Times Rich List or the Forbes Billionaire list, perhaps more attention should be brought to the philanthropist list. We could even use the metric, ’donation as a percentage of assets or income’ to put the whole thing in context and allow less wealthy people to get on it.

Someone with a £200,000 net worth that donates £100,000 (50%) should be valued for their relative donation. This should take nothing away from people that donate several billion USD as those sums are hugely beneficial. Although, few people will amass that level of wealth. However, they may wish to give a disproportionate amount of what they have.

That might be a list to strive for.

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CategoriesFinancialThink About ItTime

Shirtsleeves To Shirtsleeves In Three Generations

Posted on July 1, 2020

Wealth. It is frequently fancied while sometimes sneered at. How do you keep it in the family? Shirtsleeves to shirtsleeves in three generations is a well known, international sentiment, with this in mind.

Historically, the first generation works hard, makes sacrifices, and ensures that the money comes in. In addition, they use it well. Because of this, the first generation can grow their wealth. Often this requires practicality and frugalness. While displaying these values, their children learn more about the ingredients to success and wealth.

Parents will sacrifice their pleasure to provide a better life for their children. During this period, the children see their parent’s effort and sacrifice. Because of this, they often choose or are directed toward more stable and higher income roles. Without having to toil and sacrifice as much as their parents, who shielded them from it, they develop more of a lifestyle led existence.

The parents often sow the seed of the family’s demise. They do not always train their children in hard work, sacrifice, sensible spending and intelligent, long term investing. Certainly the second generation seldom pass key life lessons on to their children.

The third generation, brought up with wealth and a nicer lifestyle, often have few of the key ingredients to maintain or build on the family wealth. Therefore, many times this third generation reduces the family wealth. This may be through poor investing, frivolous spending, family legal disputes or trying to live up to the family name.

You can prevent shirtsleeves to shirtsleeves in three generations. Be sure to instil in your children, and grandchildren, the concepts of hard work, sacrifice and developing an investor‘s mindset.

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