Wednesday, August 7, 2013

The foundation of building wealth

What is the foundation of building wealth? Many people think that it is just plainly investment. Many think that once you have invested, that's it, it's gonna grow and I will become rich. Let me shock you, investment is not the ultimate solution. Investment is just the tip of the iceberg. 

This was my mistake before too, I thought that once I have invested, that's it! Nothing else to do but to put more and more. I was wrong.

Investing is good but it should have a foundation, just like any building, you cannot establish a 100-storey building without a foundation. Everything that you build must have a foundation, that includes wealth because creating wealth is building wealth.

Here is the Ideal financial foundation:

Increase cash flow - to make money work for us, we have to have money first, earn as much as you can while you still can.

Protection - We need healthcare when we get sick and if we are the breadwinner of the family, we need life insurance for income replacement in case something happens.

Debt elimination - Usually the interest of debt is bigger that the growth of investment, why bother investing if our debt eats all our money up.

Emergency fund - If small emergency rises, this is where the emergency fund should come in, this pays up for the small emergencies. (Not parties or going to the mall, but REAL emergencies)

Investments - Finally, after having established these, it is time to invest, we let our money make more money for us.

Why do all these? For example, we get sick and we have no insurance, where would we get the money? If you have investments, for sure, it will be taken from the investments, this will stop our investment from growing. Same thing with small emergencies, if these event arises, it will all be taken from the investment, worse, have a big debt!

The purpose for this foundation is to protect our investment, we let it grow. If I explain it here, it would like be writing a book! 

I learned all of these in IMG-Wealth Academy, such an amazing venue for learning! So if you have time and want to learn more about this, please do visit the office. 

If you are in Cebu, you can catch Wealth Academy in 2nd floor, JY Square, Lahug. Every Wednesday and Saturday, 6:30PM.

If you are in Manila, you can catch this at 3rd Floor King's Court 1 Building, Pasong Tamo cor Dela Rosa St. Makati. Every Wednesday and Saturday, 6:30PM.

Happy investing!