How many rich people do you know who have become
wealthy by investing in savings accounts? I rest my case.
But don’t get me wrong. Saving money is good. In fact,
it is important to the wealth building process. It’s not
the money saved that is important. It is the DISCIPLINE
required to save it. But you can’t except your savings to
carry you to wealth. And this is the fact that is so
Even the seemingly exciting high interest rates paid by
the popular money market funds are not enough. Any dollar
that earns LESS the 10% per year is losing venture
assuming inflation & taxes. “But, you say, “savings
accounts and certificates of deposit are safe and the
money comes easy”. And I reply, “Does it make you feel
safe and secure to know that every day you are getting
poorer and poorer?” If you ignore the erosion effects of
taxes and inflation that is exactly what could be
happening to you!
There is nothing wrong with economizing. There is a place
for it in the scheme of wealth. However, if you want to
become wealthy you must learn how to save smart. The
money you save is only parked temporarily in liquid,
interest-bearing accounts waiting for a better place to
invest. This smart money is then shifted into long-range,
less liquid investments which generate wealth-producing
rates of return. RATES well in excess of 10% per year.
ANYTHING LESS is tantamount to treading water in the
swimming pool on the deck of the Titanic!
What kind of investments generate double digit rates of
return over the long haul? Real Estate Investment
Properties. If you combine the LEVERAGING EFFECTS of
aggressive financing available to investors today with the
beauty of having someone else pay for you to own your
investment (your tenants) the results are clear. Even
when propery values only increase at modest rates of 3% to
4% per year, if you purchase the investment property with
20%, 10% or even less down, the returns on YOUR invested
capital can be huge!
Using leverage to invest in stocks is called buying
on “margin”, and it is considered to be highly speculative
and therefore risky. Using leverage in real estate is
done by almost every person in the USA who owns a home.
The wealth statistics of home owners vs. non home owners
in this country are staggering. It is as close to an
automatic way to generate wealth as you are going to get.
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