Each of us is born with the potential to succeed. Some of us fulfil this potential, others don’t. Why is this? The difference is that people who are determined to succeed reach a moment in their life when they decide to use this potential.
You too can take this decision,
regardless of your age or financial situation.
For some reason or other, instead of using these people as role models, many people settle for what they have, never having all the things they need or want. Of course work, self-discipline and an enquiring mind are necessary for acquiring wealth. Those who claim you can become a millionaire quickly and effortlessly are lying. The plan that I am proposing for you is simple to put into practice. It is the basis of all fortunes earned through hard work rather than inheritance. To implement the plan coherently, all you need is a regular income (the amount doesn’t matter) and a minimum of self-discipline.
The wealth equation
Focus all your attention on the following formula so that you never forget it. It is absolutely reliable, having been proven many times, and it will form the basis on which you will build your fortune:
Wealth = Income (or revenue) + Savings + Investments
If you can grasp the way in which all these elements influence each other, this equation will work for you as it has worked for the richest men on Earth. And by building the things you learn in this book into this equation, you will increase its effectiveness still further and prosper beyond all your expectations.
Wealth is the end result we are seeking. You need to adjust your attitude and the plans you make according to the amount of money you want, because this will have an impact on your income, savings and investments. At the beginning, income is the principle source of wealth: the monthly transfer from your employer, your commission, you performance bonus… basically the money you are paid for the work you do. As long as your income remains stable, the wealth equation will work in your favour, regardless of how much you earn, the business you are in or whether you are employed or an employer. What counts is that the money feeds your bank account regularly.
Being able to save is important if you want to become wealthy. Saving quite simply means spending less than you earn. Of course, it’s difficult to reduce your outgoings – advertising and the media encourage consumers to spend more and more, by offering you the chance to pay in instalments, borrow on interest free credit or defer payment, etc. We have purchasing power even when we are in the red! But its savings that set those who become wealthy apart from others.
You will then use your savings for investments, which will allow your savings to grow. There are different types of investments: shares, bonds, property, starting a business, etc. Investment gives you the chance to increase your earnings. Earn money, save, invest…it’s a never ending circle, so powerful that it leads finally to wealth…and you can start right now!
Free yourself from debt
From now on, nothing will stand between you and the path to wealth. But you may find this hard to believe if you are one of those people who has got into debt. When you are in debt you can’t feel secure, nor can you build the financial foundations of your future. Obviously, it’s hard to look forward to the future with hope when you feel as if you are being strangled by an ever-tightening knot around your neck. However unpleasant they are, debts are not insurmountable and they won’t prevent you from achieving your financial freedom. The wealth equation is simply formulated differently:
Wealth = Income (or revenue) + Savings + Investments – Debts
What you have to do now is approach this ‘difference’ with a positive inner attitude and the same self-discipline you apply to your financial management. Believe that you can free yourself of debt, take the necessary steps…and soon they will be nothing more than a bad memory!
Financial advisors differ in their opinion on what to do about debts: should you pay back your debts first before you start saving, or can you do both at the same time. Personally I prefer to pay off my debts first, for one simple reason: the interest on loans is generally 4 to 5 times higher than the interest you earn on secure investments.
This is clearly shown in the following example:
Level of debt (overdraft on your current account) 10 000 €
Loan Rate 12.5 %
Interest payable in one year 1,250 €
Money saved (at present) 10 000 €
Rate 2.75%
Interest earned over the year 275 €
The difference between the interest paid and the interest received is 975 euros, money that you could save! The difference in the rates of interest is: 12.5% - 2.75% = 9.75%. I’d like to know where I can find a capitalisation rate of 9.75%, I’d invest all my money in it right away! By investing 100,000 euros at such a rate, I would have 9750 euros extra at the end of the year. So its better to pay off your debts first, if you have them. Not only will you fell better, you’ll save money too.
You should note that this logic does not apply to mortgages or rented property. Firstly, the interest rates are much lower, because the banks providing these mortgages have more collateral, then you can claim tax relief on your mortgage debt, as "negative income from rentals or leasing". This means you pay less tax than you would have done on these transaction, and you even get ‘negative income’ when the advertising costs exceed the rental income, which reduces your taxable income overall.
There are several ways of paying back what you have borrowed, to pay off your debts. If your have several creditors, and you have to pay a certain amount to each of them every month, prioritise the smaller debts. Pay off the highest debts by making the highest payment possible, and the debts with the lowest interest rate should be paid with the minimum repayment. When the debt with the highest interest rate has been paid back, start on the debt with the next highest interest rate, and so on. In this way you will pay off your debts and save money. When all your debts have been paid off, you will then be able to set a new ceiling for your financial security.
Whatever your current financial situation, you can improve your financial power if you are prepared to confront the situation, instil some self-discipline and live according to your plan. The reduction in your debts will give you strength. There is absolutely no doubt that if you programme your finances with the ‘wealth equation’ you will get out of debt and achieve your financial objectives: financial security, financial independence and financial freedom. But you must stick to your programme if you want to become wealthy.
The equation that I am going to reveal to you now is the equation of extraordinary wealth – it can bring you far better results that you would get just by managing your money intelligently! Extraordinarily rich is what you will be when you activate your potential and make your dreams a reality, so much so you will be able to share a part of your wealth with the world. The equation is written as follows:
Extraordinary wealth = (Income + Savings + Investments) x Secret riches
Yes, your personal secret riches we mentioned before can supercharge your finances and significantly speed up the achievement of your financial objectives. Consciously or not, everyone who has become rich embodies that equation. In your case, what you will have to do is activate your secret riches (talents, dreams, wishes, beliefs, love, passions, world vision, etc.)… and mobilise all your money-making potential. And if you can manage this, you will achieve financial freedom.
All those who have combined their secret riches with the wealth equation have achieved extraordinary results.
Bill Gates for example, has the biggest fortune in the world. Born on October 28th, 1951 in Seattle (USA), the second child of a well-off family, he was fascinated by economics and maths. From the age of 13, he developed his talents at Lakeside private school, where he met Paul Allen, his future business partner. After some success using a computer supplied by the school, the two friends set themselves the task of finding faults in the DEC computer programme, of the Computer Center Corporation. Their collaboration was a success and they decided to set up the Lakeside Programming Group. Gates studied at Harvard for a while, until the moment when his ‘business instinct’ was awakened.
From then on he focused on developing new software, working on perfecting the Altair computer, which had already been launched. In 1975, the company Microsoft was founded and in 1981, he laid the foundations of his empire.
Bill Gates recognised the potential of the Seattle Computer Products SCP-DOS system. He bought the system and used it as a basis for creating the MS-DOS system. In 1983 the first version of Windows was launched in MS-DOS, a piece of software so simple that anyone could use it. This system was considered revolutionary but no manufacturer or user was prepared to take a risk on it, preferring to stick with the known systems. Bill went from conference to exhibition, but no major orders were forthcoming. Undeterred, he continued developing the Windows system through to version 3.0 which was launched in 1990. And his perseverance paid off. Now even the most sceptical would consider that he reinvented the computer.
The example of Bill Gates is only one among many. Play your hidden assets…and you will see that they will take you just as far. The door to financial freedom is open: the best thing you can do is step over its threshold.
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