Sunday, August 10, 2008

Invest to Create Wealth

Sharing a thought...

People work to pay for their bills, save to purchase their dream car/house/holiday, retirement, etc. Some save to invest with the hope that their investment would help them to generate profit, amass wealth for their retirement, enable them to generate fast money to help them to achieve their dream faster, etc.

Those who save/invest for their retirement hope that their retirement fund would be enough to sustain their live for the next 20 to 30 years. In reality, usually their retirement fund is inadequate due to high cost of inflation, high medical fee, etc.

Those who does not even save for their retirement years, will have real problem if they thought their statutory retirement fund is adequate. It's generally not enough especially if we are to take into consideration the net return the fund earned which is even inadequate to cover inflation rate! To put it bluntly, our retirement fund value depreciates as inflation appreciates if the return on the fund is negative!

Therefore, it is important to set aside additional amount of money in vehicles that are able to generate income passively eg interest income, dividen, mutual fund, rental income, etc. Or purchase assets that may appreciate in value eg real estate, gold, collectibles such as antiques, stamps, etc. Another venue is to create or involve in businesses that are able to generate passive income eg network marketing, royalties from books, songs, sales referrals online, etc. Setting up a business with the intention to sell it off in the future is another method to create great wealth.

Passive income is generating enough income to live the lifestyle that we desire without having to work. Of course, to generate such income, initially we would have to work hard in building the chosen vehicle with the hope that in future it is big enough to generate enough income on its own to support our lifestyle and without our involvement.

There are a number of people that I've met that lamented that they do not earn enough to set aside for saving/investment. My advice, reduce your expenses/simplify your lifestyle and work on another source of income! Yet, I am surprised, most of them refuses to change their lifestyle or even work to improve their situation! No wonder, as Harv Ekar said, they are broke!

Invest to create wealth! To be financially free, we must be committed to achieve it, otherwise is just a wish.

Therefore, set aside a portion of your income on any vehicles that has the potential to generate income, appreciate in value or involve/create/buy a business that is able to generate passive income to ensure that your desired lifestyle is able to be sustained for a long time.......

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