09/2/13

7 rules for growing slow (but sustainable) wealth

I am reposting this from getrichslowly.org

This guest post is by Pejman Ghadimi. Pejman is the founder of SecretEntourage.com, an author, an entrepreneur and a leadership consultant.

Many will argue that fortunes can be made overnight; while that may hold very true in some cases, the majority of those who have made it will tell you it did indeed take a great deal of time coupled with some correct financial choices. For me, wealth did not come solely from entrepreneurship or financial risk, but rather it came as a result of diversifying my investments all while growing my equity leverage and identifying the right opportunities early on.

I made my first million before the age of 27. It took me close to 14 years of hard work and trial and error to get there. But I did get there nonetheless, and I can tell you that it was quite a learning experience. I not only learned a lot about my capacity and tolerance for risk, but also quite a bit about financial systems and loopholes that exist. I want to share with you today seven rules that you can follow to making sure you also get on the right path to slow, but sustainable, wealth.

Rule 1: Think net instead of gross. Many get consumed with the continuous desire to grow their gross income but often forget to leverage their net income. Increasing your net income by lowering your taxes is no different than raising your gross income. Make sure to reassess your net situation often by leveraging your write-offs early on.

Rule 2: Embrace economic pressure. There will be many times in the next 10 years where you will identify an opportunity to invest or be part of something that requires you to be uncomfortable in your financial position for a set period of time. Just keep in mind that risk equals reward, and without any type of financial risk, you are doomed to stay a prisoner of the lower interest rates set by banks. Continue reading