How To Create A Wealth Strategy
Step 1: CLARIFY YOUR WEALTH VISION
Taking ownership of your wealth strategy means gaining clarity around your goals and objectives. Pull out a journal and write a vivid description of your ultimate lifestyle. Where do you live? Who is with you? Where do you travel? How do you spend your time? Be as specific as possible about the life you dream of having.
There’s a great scene in Lewis Carroll’s classic Alice in Wonderland, where Alice asks the Cheshire Cat, “Would you tell me, please, which way I ought to go from here?”
The cat responds, “That depends a good deal on where you want to get to.”
Alice replies, “I don’t much care where.”
And the cat answers wisely, “Then it doesn’t matter which way you go.”
It’s much the same with your wealth strategy. You need to know precisely what you want to achieve so that you can create a plan to get there. What is the precise cash flow you want to reach to live the life you desire? Once you know that, you’re ready to build a plan to get there.
Step 2: TAKE OWNERSHIP
Many people trying to build wealth make the mistake of putting advisors in charge of their wealth strategy. Why is that a mistake? It’s not the expert advice that’s the problem. It’s putting them in charge. The experts with whom you work should be your trusted advisors and guides, but YOU should be in charge.
A successful wealth strategy starts with you. You are the best person to control your money. Taking ownership of your wealth strategy is the best way for you to build massive wealth. You can evaluate others’ recommendations, but you should understand and direct your investments, your tax strategies, and your wealth-building techniques.
Step 3: CHOOSE YOUR NICHE
As you begin to build your wealth strategy, you will face many options for investing your money and accumulating assets that deliver cash flow and build equity. The four main asset classes are business, real estate, equities, or other “paper” investments, and commodities, such as oil and gas or agriculture.
Your task in this step is to choose from among those asset classes where you’re going to specialize when it comes to building wealth. There is no right or wrong choice here. The key is to study the options and select an asset class that suits you and your personal situation and plays to your natural strengths. Then, drill down and get laser-focused. Learn all that you can about your chosen niche so that you become a subject matter expert in your chosen area.
Why is this important? This is how you’ll gain momentum in building wealth. If you stick with conservative investments, your money will grow slowly; a 3 percent growth rate will double your money every 24 years. But if you can achieve a 10 percent growth rate with your asset selection, your money will double in 7 years.
This is where you’re building your wealth, so take it seriously. You want to be investing in assets that generate positive cash flow. You want to be able to repeat the investment process repeatedly to scale your results. For example, suppose you’ve selected residential real estate as your chosen asset class. In that case, you want to create a formula for what types of properties you buy, where you buy them, and how you manage your properties. That way, you can repeat this process with predictably positive results.
Step 4: ESTABLISH YOUR TAX STRATEGY
What do taxes have to do with building wealth?
A lot, if you take the right approach.
A successful tax strategy is a plan of action designed to permanently reduce the amount of tax you pay, putting more dollars in your pocket to invest the way you choose. It is a paradigm shift that turns the tax code into a guide for building wealth. By taking a strategic approach to structuring your business entities, planning and documenting your deductions, utilizing your available tax brackets, and other factors that impact your tax obligations, many entrepreneurs can lower the amount of tax they pay by 10 to 40 percent.
Playing less taxes means more money and faster wealth building.