I love Loral Langemeier's views on wealth. Her books "The Millionaire Maker" and "The Millionaire Maker's Guide to Creating a Cash Machine For Life" discuss what I would say is just common sense, but to most her suggestions might feel like going against the grain.
Here Loral explains the secrets of the affluent, which really shouldn't be secrets at all, but information that should be known to everyone.
Wealthy people understand the Wealth Cycle. Truly wealthy people aren't those you see with expensive houses and fancy cars but are simultaneously cash poor. The wealthy people she has met managed their investment portfolios so that they had cash, income and equity producing assets, and they continued to increase their wealth month after month.
Loral certainly didn't become a millionaire by the age of 34 by buying and holding on to one big house and pouring the rest of her money into an IRA or 401k. She became a millionaire, and continues to grow her wealth, by building a business that created a steady cash flow, and by using that cash and/or other people's money to buy assets.
Those assets in turn generate more cash either monthly, or on a long term basis, which she uses to purchase even more assets.
Do you see how this works? The basic concept is simple, and it may be the most important concept you ever learn about wealth and money.
First, you'll need what she calls a Cash Machine. It's not a job and it's not necessarily your life's ambition. The cash machine is simply a way to make you money to buy assets. Down the road, after you are earning enough income each month from your assets, you can own and operate your dream business.
Second, you use your cash to invest in opportunities that will yield an above average return on investment. You do this through true diversification. We are told that a diversified portfolio is one in which you've got a blend of stocks from different industries, some mutual funds, and even a bond fund. true diversification is very different.
REAL DIVERSIFICATION
While the affluent may have some of their money invested in stocks and mutual funds, it is typically only a fraction of their true wealth. Instead, these savvy money managers invest in:
-Multiple real estate opportunities (i.e. single family dwellings, apartment houses, strip malls, warehouses, office buildings, etc.).
-Business ventures (i.e. not just the stock, but partial or total ownership of the business itself).
-Oil and gas wells (again, the actual wells, not the stock of oil and gas companies).
If you have any desire toward affluence--that is, living the kind of life you really want--then you'll change how think about investing. the beauty of this secret is that you don't have o be wealth to use it. You can start today--right now--educating yourself on this Wealth Cycle of the affluent. You'' reserve money each month with which you'll purchase assets. You may start with cash producing assets that soon bring in more money to purchase equity producing assets, and even more cash producing assets. And so the cycle continues, bringing you to millionaire status within 3-5 years.
Know this: when you achieve millionaire status through wealth cycle investing, you learn how to continue to grow your wealth while you're living the affluent life. Unlike lottery winners whose sudden wealth quickly drains away, you build--and continue to build--your wealth, year after year.
3 THINGS YOU CAN DO TODAY TO BECOME A MILLIONAIRE:
You need to do a good job of building your team to have a working cash machine.
1. LOOK TO YOUR ROLE MODELS- Whom do you know an admire that's been successful? I'd like to be like ______. Whether it's someone with similar graphic design skills, or someone who has the pro golf shop you dream of having. Look to them as leader. They might make good mentors and be willing to come aboard your team as consultants or colleagues.
2. GATHER SUPPORT PLAYERS- You'll need people with strengths outside of your own that add value to your business ventures and free up time for you. Administrative assistants and utility players such as bookkeepers or copywriters flesh out he team. So do the support people such as housekeepers and nannies.
3.CREATE A TEAM NETWORK- Your team isn't just working for you. They're working with you and each other. It's important to make introductions and communicate roles and responsibilities. Connect the dots and resources you have so that so that everyone is working together, leveraging the best of each others abilities.
I have begun initiating the guidline's Loral suggests and have begun to see dreams turn into reality. I reccomend that you read her books and give it a try for yourself.
Loral Langemeier is founder and CEO of live Out Loud and the author of "The Millionaire Maker." Learn more at liveoutloud.com
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