Work and Wealth
The Own and Invest method
Own and Invest
Over the last few weeks we have delved into the ways you can become a millionaire. First was the guaranteed path to becoming a millionaire using the Scrimp and Save method, which involved the three simple steps that guarantee a seven figure net worth.
The second method we explored was Hoping and Praying, which is based on winning the lottery or getting a huge inheritance. This can get you to the millionaire status but it’s no sure thing.
The final way to become a millionaire is the old fashioned method of owning, earning and investing. This method centres itself around owning something (usually a business) to earn above average income and invest those profits to generate wealth. This is a philosophy that has stood the test of time and remains the most effective method to become wealthy.
Now this method lies somewhere in between those discussed previously, although it does not have the guarantee of success in the way offered by scrimping and saving. Creating a business definitely carries some risk of not being as successful as desired. But it is not down to ‘chance’ outlined in hoping and praying. The business, various skills and investment decisions are learnt and developed, not left to chance.
The method involves three key pillars to being successful
- Learn a financially valuable skill
- Start a business in an up trending market/niche market to apply the financially valuable skill
- Spent less than they made and saved/invested the difference
Learn a financially valuable skill
The first step is to identify a financially valuable skill which can be used to make you more valuable to employers, customers or clients. Unfortunately we aren’t taught that picking a career or profession does not necessarily provide you a skill that is highly valued and rewarded financially.
The key driver to a business is generating revenue and profits. This is the very basis of their existence and developing a mindset based around revenue, expenses and profits is a must.
To move along the wealth path will require skills that can add value in these areas of revenue and profits. The most obvious skill relates to sales and marketing due to their direct link to revenue and profits. These skills, whether it is the ability to sell to people, develop marketing material or grow new business opportunities are vital to a business.
But not everyone wants to be or can be in sales or marketing so other highly technical skills such as software programming, management or finance can often fit into our category of financially valuable skills. When considering what skill to learn, if it can directly improve the revenue and profits of a business, then you’re on the right path.
Picking a skill should be not solely about what will be the most lucrative, it must be something that you have an interest in, fit your personality style and when it gets tough (as it will at some point) you will be able to persevere. The important thing to consider is that the skill doesn’t necessarily need to be at the level of guru, it just needs to be at a level of competence above the average person. Then throw in a solid work ethic and the results should be outstanding.
The Own and Invest philosophy has proven to be successful across many generations and is the best choice from our three methods to generate wealth. Through developing a mindset on what drives the creation of wealth, all financial decisions become easier to make.
We’ll cover the final two criteria in future articles but in the mean-time, start developing your existing skills or brain storm new ones that can make you financially more valuable.