Want to be Wealthy?
Being "wealthy” will mean different things to different people.
What does it mean to you and how can you gain wealth?
What is wealth?
Being “wealthy” is a matter of perception. Whether it is having the money to help you achieve a dream, just having enough money to live comfortably, achieving complete financial independence, or being so rich with money that you can be a philanthropist and give some of your money away to help others. We all have different values and lead different lives, so we all view being wealthy from our own perspective.
For my wife and I, we don’t see it as being exorbitantly rich. Rather we see it as “taking money off the table”. That is, being sufficiently financially independent so that money doesn’t constrain us in achieving our personal goals and ambitions. It gives us the freedom to do what we want to do, when we want to do it, and it doesn’t stop us from having fun and enjoying life.
Feel free to copy our definition, if this speaks to you. However, I encourage you to explore what being wealthy actually means to you. In fact, I cover this in the The Why module of the free online Investing Course. Doing this crucial step well is one of the keys to financial success, as a clear vision of the future you desire will help you set and stick to you investing plans.
Three Pillars of Wealth
How does one become wealthy? Apart from winning a lottery or getting a large inheritance, there are generally three ways to achieve financial independence:
- Owning appreciating assets - for example, property, art, antiques, etc.
- Growth and income investments - for example, shares, managed funds, term deposits, etc.
- Entrepreneurship - by starting and owning a successful growing business.
I believe successful wealth creation encompasses all three of these pillars. By the way, not everyone can start their own business, but you can invest in successful growing businesses started by other great entrepreneurs!
Please note! You will notice “being employed in a well paying job” is not one of the pillars. That is because you are simply trading your time and efforts for money. You are not building wealth. However, how you use and invest the money you earn will help you create wealth.
How do we use the three pillars to build wealth? It’s all about ‘passive income’ - income that you haven’t had to trade your valuable time for. This is where your money is working for you! You invest in the three pillars to make money. The money you make from your investments is passive income.
The key to becoming wealthy is to reinvest your passive income, which makes you more money (more passive income), which you invest to make even more money! The goal is to have enough money invested so that the passive income generated meets your definition of 'being wealthy’.