By Jamie McIntyre
What if I wanted to actually become wealthy in a hurry? How would I do it? No doubt, this is a common thought many people have at some time or other.
Wouldn't it be nice if it was possible to create significant wealth in a short time frame? Perhaps, it's creating wealth in only a matter of a few short years, or even less. If it is possible, then how can you get started straight away? Firstly, you need to use the right strategy or more importantly a combination of strategies.
I'm not advocating 'get rich quick' schemes, but neither am I advocating taking longer than necessary to create the wealth and lifestyle you may desire.
My millionaire mentor said to me many years ago, it's all about synergy. He went on to explain that if I wanted to become a selfmade millionaire in my 20s and was in a hurry, that yes, it was possible as long as I was prepared to take massive action; intelligent action. I would also need to become a fast learner and apply highly effective strategies in certain combination and make no excuses, or allow distractions from my goal.
He shared with me the three key areas in which to create wealth:
1. Career (either a job or business).
2. Investing in the property market to gain leverage and over time accumulate riches.
3. Investing in the share market.
He said the key is to understand synergy.
He explained that using just one of the above vehicles has created wealth for many Australians, especially in real estate, but if you wish to do it in a hurry, combining numerous strategies at once can lead to an acceleration effect.
For example, he asked what does one plus one equal? Most people will say two, yet this is not the case.
One plus one can equal well more than two, due to the exponential returns of combining strategies.
He went on to explain that by just investing in real estate to buy and hold over your lifetime is a powerful way to become wealthy.
But it takes time. He explained that by combining property investment with share investment you can accelerate your results faster.
For example, he explained that in the beginning, property when negatively geared provides little if any cash flow. This means until rents increase and debt decreases you aren't going to get rich from cash flow.
He said that most people invest in shares for capital growth and that's why most people don't create the wealth from shares they'd like to.
He said why would I invest in shares for capital growth, when in most cases property has proven a far better return for capital growth?
For example, even 6% pa capital growth on property, but leveraged at 90% of the loan is equivalent to 60% pa return on outlay, versus 13% pa in average growth of shares.
With shares you simply don't do 90% lends due to its higher risk. But rather than dismiss shares altogether, he mentioned what property can't give me in the short term i.e. cash flow is exactly what shares can make if you learn how to rent shares or sell insurance.
Actually, he called it another name at the time, but I coined the terms 'renting Shares' and 'selling Insurance' some years later, to better explain it to others.
The point being, by combining real estate for capital growth and shares for monthly cash flow, one could have the same lifestyle results from property within five years that would normally take at least 15 years waiting for rents to significantly exceed monthly interest bills. But he didn't stop there.
He said that the most common mistake occurs because people see investing as the fastest way to get out of a job they often don't like. They often stop working too soon, slowing their speed to true wealth and lifestyle.
He taught me to focus on building my income up as fast as I could and developing multiple income streams. The additional income can boost one's property and share portfolios, accelerating one's wealth further.
He said it also truly diversifies one's wealth and makes one recession proof; if the share market is down, often the property market is up, or one's business and career incomes may be doing well. So to become wealthy faster, my millionaire mentor suggested to consider synergy and to become financially educated in multiple areas of investments, not just one.
Jamie McIntyre is founder of 21st Century Group of Companies. www.21stcenturyacademy.com
