This is why you must learn the rules to winMay 26, 2020
Learning the rules
As a young graduate I went to work in London’s West End at Marylebone for a mid-tier accounting & business advisory firm, where instead of listed clients we largely acted for family businesses and high net-worth individuals.
It was eye-popping to first discover and then observe how wealthy families with well-run affairs were able to create, continually grow, and then pass on their wealth in such a seamless fashion.
Wealthy families just seemed to intuitively understand the rules of how to play and win the game (they also had good advisors, of course), and accordingly profits and success gravitated effortlessly to them.
Winning the game
If you’ve played the board game Monopoly regularly enough you’d eventually come to learn that there’s a certain set of rules to follow if you want to win the game consistently.
For example, you don’t try to save your money, you invest it to buy properties early in the game, and then develop aggressively…especially on the busily popular orange and red sets.
However, you shouldn’t bother with the utilities, which the statistics show will only serve to drain your cashflow with few benefits accruing: they have no explosive growth potential, nor any option to develop later.
Advanced strategies include creating an effective housing shortage to strangle the other players by using up the 32 green houses…and staying in jail for as long as possible later in the game!
It’s a little bit the same in the real world of real estate investing (doing prison time excepted, obviously).
As an investor you should buy well-located properties with a high land-to-asset ratio as early as you can in the game, and later you can renovate or develop them when the time is right to add further value.
It’s what you keep, not what you make
As a young CA I also noticed that the wealthy tend to structure their affairs efficiently, ensuring that they invest pre-tax dollars to compound and multiply their net worth.
On the other hand it can be both staggering and soul-sapping how much some employees pay in tax over their working lifetimes, making it depressingly hard for them to get ahead.
As well as the rules of investing, then, you also need to understand the other rules of the game, such as the appropriate structures and tax legislation.
A further critical aspect to building wealth is having a systematic approach, and a determined strategy.
It’s quite common for folks to follow an unstructured approach, and their results are inevitably haphazard.
Since the first rule of engineering is that if something can go wrong it eventually will, it’s crucial to develop and codify your own set of rules that you will follow, rather than making emotional or ad hoc decisions under pressure.
I discussed these ideas a little further in the short video here
Whenever you’re ready… here are 4 ways we can help you manage your own money and go next level wealth:
- Boom or Bust in 2021 – 20 minute online workshop for investors
Register for my next free online training - Boom or Bust? How to change your investment plan for 2021 - book in here
- Subscribe to our Top 100 Podcast for Investors
- Join our Implementation Program
We’re putting together a new coaching case study group this month for private investors. If you’d like to get the plan, tools and timeless principles for managing your money and creating next level wealth … just send an email to [email protected] with the word “Case Study” and we'll get you more details.
- Work with me privately
If you’d like to work directly with me and Stephen Moriarty directly to help you map out and action your next level wealth plan… just send an email to [email protected] with the word “private”… tell me a little about your situation and what you’d like help with, and we’ll get you all the details!