If you want to amass riches, here are 3 proven principles to make it much easier for you.
1. Buy a house that costs less than you can afford.
If you max yourself out on your home, you’re going to find the money you would’ve spent buying assets is spent paying off your home – plus you may cap out your borrowing power and serviceability.
So consider buying house that’s less than you can afford, and use the money you’ve got left over to buy other assets. After all, you don’t want to be ‘looking good, going nowhere’.
2. Raise your ‘investible income’
There’s a lot of books written about how to retire comfortably by living on baked beans and rice.
They are generally written by people who got rich by boosting their investible income through a business – i.e. selling books on budgeting – not by living frugally.
The thing about living below your means is while good, it’s a limited path.
If you earn $80,000 per year and live in a big city, you can only save a certain amount after rent/mortgage and living expenses.
However, there is virtually no cap on how much you can boost your income by, when you know how.
And, when you boost your income, this allows you to buy assets more aggressively. If you make $250,000 per year, and you save $100,000 per year, you can really build a great asset base.
Now of, course, there are many ways to boost your income, the first step is making the decision it’s something you need to do.
3. Buy lots of good quality cash and equity producing assets.
One of my business partners has a simple strategy.
He boosted his income then bought lots of blue chip property in the inner north of Melbourne.
Now, he does small developments – 1 into 4 townhouse developments etc.
This has worked very well for him.
If you buy a house that’s less you can afford, and you boost your investible income, then you will be in a good position to buy lots of assets.
Then, if you’ve bought good quality assets, every night as you go to sleep you’ll wake up richer as they pay you cashflow and appreciate.