Steps 1–3 in Creating Financial Security

We'd all want to see ourselves enjoying the finer things in life, free of financial worries and the fear of getting old and penniless.

But how can we alter things if we are presently living paycheck to paycheck, never appearing to get ahead or have any savings? Where should we begin in our search for financial stability?

The greatest thing we can do is sit down, take a big breath, and reflect on the contrasts between the haves and have nots, achievers and laymen. What do the successful and rich do differently than we do? What are the principles they use to generate wealth?

Once we discover the concepts that others who have built financial stability have employed, it seems that the only thing left for us to do is attempt to replicate the process.

The following is a collection of wealth-building ideas that I have uncovered via my research and talks with successful individuals.

These ideas have previously been used widely by people who have amassed huge riches.

1. Take use of the power of compounding interest/growth.

Compounding interest was previously referred to as the "Eighth Wonder of the World" by John D. Rockerfeller.

Compounding is also known as Rate & Time since the longer the time period and the higher the growth rate, the larger the impacts of compounding.

Compounding works by adding any interest gained to the original investment, and then calculating the next lot of interest on the total of the two, and so on. On interest, interest is earned. This has the effect of boosting the value of an investment enormously.

The Rule of 72 is one of the simplest methods to determine how compounding interest works with varying rates of return. According to this formula, "the number of years required for your money to double is 72 divided by the interest (growth) rate."

As a result, if you invest $1,000.00 at 10% interest, it will take 7.2 years for your money to double to $2000.00.

72 divided by 10 equals 7.2

2. Invest in residential real estate using a tried-and-true strategy.

According to statistics, more than 98 percent of the world's billionaires got their money via property.

It should come as no surprise since everyone needs a place to live, and at least one-third of the population rents. Because property is a need, it will never go out of style.

As the population grows, so will the need for homes. As a result, the principles of supply and demand will assure that prices continue to rise.

Banks consider real estate to be one of the most safe assets, and as a result, they will lend you a large proportion of the value. This brings us to the next premise.

3. Gearing, or using other people's money, is a popular strategy among the rich.

Why is it so vital to use other people's money? The rationale for this is that "leverage," also known as "gearing," may be used to get a higher outcome than you could have gotten with simply your own efforts. The term leverage is derived from the word "lever." As you are aware, a tiny amount of force applied to one end of a lever may yield significantly larger force than was first applied. The action of a lever is to amplify the power exerted.

In the context of investment, leveraging occurs when you spend just a little percentage of your own money, say a 10% deposit on a $300,000 property, and borrow (leverage) the remainder, in this example 90%. The capital gain that you earn from is then computed on the whole $300,000, not just the $30,000.00 that you contributed, thereby increasing your capital gain.

Gearing enables you to buy a far more costly house than you could if you simply used your own money. Controlling higher-value assets implies that compounding growth has more to work with, and your net worth will rise much faster. Gearing helps you to construct an investing portfolio faster than you would otherwise be able to.

If you want further support, you may benefit from my 30-minute wealth building session. We'll speak about your financial goals, go through your current plan, and answer any questions in the following 30 minutes. This training will be educational and will help you design a better plan.

Send an email to [email protected] to set up your meeting, and I will contact you.

Thanks

Citrone