Last Monday I received a bank deposit for €405. On Thursday I received another bank deposit for €670. These were automatic deposits of income from a rental property I own.
On Wednesday I received a wire for €4266 from an investment made last year. This was a private placement deal from one of my personal connections.
On Friday I received €1670. This was from an investment I made in a private company awhile back – another one of my personal connections.
From one of my online businesses I received a deposit of $3094 this past week. This online business is with a partner who I met at a conference a few years ago – another personal connection.
From another business last week I received automatic payments of $550. This was from an annual renewal of services
In the past 7 days I have been paid $1563 in dividends. I also cashed out an option position for $1332.
I’m not even including earned income from my consulting.
That’s a pretty good week. Some weeks are better. Some worse. But still, not a bad week.
I want to share with you 3 secrets to perpetual wealth. Each of them illustrated in the examples above.
1- Multiple Streams of Income
Many years ago I read a book titled, “Multiple Streams of Income: How to Generate a Lifetime of Unlimited Wealth” by Robert G. Allen. That book had a powerful effect on me and taught me many lessons about creating sustainable and lasting wealth.
First of all, this is not about looking for a 2nd, 3rd, or 4th job. You cannot continue to trade your time for money. Leverage is the key here. Without leverage you will remain trapped in employment slavery. This requires a hard shift in mindset.
Last week I had a chat with an old friend from my hometown. He was down and out. In despair and on the edge of depression. He is sick of working late hours and reached his breaking point when his young son called him at work and said he missed seeing him.
Bill asked me if I had any suggestions about a new job; or even a business. I told him that his problem was not his job, but his mindset. He had limiting beliefs and needed to alter his mindset first. The rest would follow.
I can tell you the same thing. If your mindset is still stuck in the “trading time for money” realm, you need to break those chains. You will never get to the point where you can not only have multiple streams of income that give you a tremendous lifestyle – but freedom as well.
That will only come when you accept that what you have been doing does not work and become open to change. In order to change, you will need to radically alter your life. First and foremost, that will mean changing what you put into your head.
I told Bill to take a sledgehammer and smash his TV’s. Then go buy several books like “Choose Yourself” by James Altucher and a few others and spend his TV time readings books.
If you are already a person who has broken free of the mental chains that limit your beliefs, then next you need to start to find those opportunities for multiple streams of income.
As previously stated, you don’t need another job that sucks large amounts of time from your life. The idea is to create streams of income that can be partially or fully automated.
In my case, the rental properties are nearly automated. I have a property manager than handles every detail. Finding a good property manager is a key ingredient to happiness.
I travel…a lot. I don’t have time or the ability to meet tenants, fix a broken toilet, or handle management issues.
I am personally a huge believer in real estate investments. First of all, you are getting your money outside of the corrupt, incestuous banking system and into a hard assets.
I am not a doom-and-gloomer, but I don’t have much faith in the fiat currency system. It’s intrinsic value is zero and eventually it will get there. That may take years or even decades, but in the interim – fiat values fall every single year.
Real estate also offers you cash-flow. You can rent property for cash, or anything else you and your tenant agree upon as a reasonable medium of exchange. Like I told one of my doom-and-gloom friends this week, “even if we do have a catastrophic monetary crisis I can exchange rent in one of my properties for chickens, goats, vegetables or loaves of bread – cash is not the only thing of value”.
My online businesses are not purely passive as they do require some work, but they offer a level of freedom you will never find in a traditional job. Online business offers you the flexibility to work from anywhere, and in some cases at any time. It truly gives you freedom when you are not a slave to your desk.
In our online businesses we have a team who handles much of the day-to-day functions leaving me and my business partner with the creative tasks.
The great thing about that is when we create something, the rest of the processes are automated. We do the work once, and reap the rewards for weeks, months or years.
I don’t want to discuss this too much here as this is a completely separate topic, but trading stock options is another one of my favorite income streams. It requires a bit of patience and education on how to properly do it without taking on enormous risk, but once you become proficient it can be a tremendous stream of income that requires very little time.
Personally I spent a lot of time and energy learning how to do it. But now I spend less than 2 hours per week trading options. But my income from just this one source is typically several thousand dollars per month. If I am trading time for money, this is a very good trade.
2- Compounded Passive Investments
This is where it can get really interesting. A good friend of mine – Billy Murphy from Forever Jobless, told me a couple of years ago at an event, “If you aren’t reinvesting your profits back into passive income investments, you are destined to a life of employment”.
The idea is to take your excess profits from your job or business and reinvest them into assets that earn you an income. This is key – “Earn You an Income”.
I cannot stress this enough. Many people “invest” in tech stocks, speculate in penny stocks, or “invest” in real estate with the HOPE of selling it at a later date that exceeds the price they pay today.
While that may be possible, it should not be your focus. Investments are things that make you money. Liabilities are things that cost you money. The above-mentioned “investments” or nothing more than speculations that are not earning you an income, but only offering the hope of future capital gain appreciation.
I am not a big believer in strategies like flipping houses. I know many people do it successfully and many seminar promoters sell thousands of tickets for hundreds of dollars promising wealth beyond your wildest imagination in the lucrative business of house flipping.
*As a side note, the seminar promoter has figured out how to scale his business by selling 1000 tickets for $500pp ($500,000) marketing “get-rich-quick” information. Think about that for a minute.*
The name of the game here is cash-flow. Create cash-flow from multiple streams, then reinvest that cash into other assets which also gush cash. Rinse and repeat.
Let me show you one example with a dividend paying stock. This stock is trading at $50 per share. The share price is growing annually at 4% (or .33% per month), and paying an annual dividend of 4% (or 1% per quarter).
*insert compounding dividend png
In this case, we are reinvesting dividends through the company’s DRIP (dividend reinvestment plan). Each quarter the company pays a dividend – but instead of cash, it pays you in fractional shares of the company stock.
In the next quarter you are receiving dividends on more shares. For example; in month one you have 1000 shares. But in money four, you now have 1010 shares. In your 2nd quarterly dividend you are now receiving dividends on 1010 shares, not 1000.
Skip to the end of year 10. You now have 1474 shares. For simplicity sake we left the dividend at a flat 4%. Now you are receiving dividends on nearly 50% more shares without investing another dollar of your earned income. Your money is now making money.
You will notice your share price has increased almost 50% to $74.54. This is due to the annual 4% increase in share price. However, the value of your shares has increased by more than 100% to $110,982.34. That is the power of compounding wealth.
You can do exactly the same strategy with virtually any investment. Let’s say you buy a rental house for $100,000 that pays you $10,000 in annual income. Instead of buying $10,000 of useless stuff, you reinvest it.
Of course it’s not likely you can buy another rental house for $10,000 (I don’t think you would want it if you could), but you can certainly find another investment for that amount.
At a minimum, you can reinvest that cash into dividend paying stocks as discussed above.
I don’t want this to sound like an article about recommending stocks. It is not. I am a huge believer in diversification. Stocks are just one part of that equation.
At Global Wealth Protection, we believe in not only asset class diversification, but also geo-political diversification. Invest in multiple asset classes as well as invest in multiple countries. It really is easier than you think.
We don’t believe you should keep all your eggs in one basket from either perspective.
Dividend paying stocks are certainly one source of passive investments that can easily be compounded into serious wealth. But it is not the only asset class.
As mentioned earlier, real estate is another asset class that can be grown and compounded into serious wealth. Take a look at the list of the richest people in the world – The Forbes 400. You will be hard pressed to find many on that list who don’t have a portion of the wealth in real estate. That may not be the origin of their wealth, but it certainly plays a part in perpetuating their wealth.
Real estate offers you a way to grow and compound your wealth while retaining an intrinsic value, unlike paper wealth in stocks and bonds.
There are several real estate investment opportunities present like; coconut farm in Nicaragua, mango farm in Panama, real estate fund in Eastern Europe, and much more.
These types of investments earn you cash returns, geo-political diversification, the safety of a physical asset, and all in a 100% passive manner. Again, your money is working for you instead of you working for your money.
3- It Really is about Who You Know
I saved the best for the last. While the ultra-wealthy may invest some of their wealth in the public stock and bond markets, the vast majority of the best deals are only found through personal connections.
Consider Warren Buffet. His investment firm – Berkshire Hathaway invests in many publicly listed companies. However, he makes many deals not available to the general public due to his connections.
In 2008, Buffet invested $5B in Goldman Sachs. But not just any investment available to the common man. He invested in a special type of perpetual preferred shares paying him a 10% dividend. He also was granted warrants to buy $5B of common shares at $115 per share, well below the market price at the time. That accounted for about 10% of Goldman Sachs market value at that time. As icing on the cake, if Goldman Sachs went to market to raise money through a public offering of shares it would dilute Buffet’s shares so he secured the deal that made sure Goldman Sachs would have to pay him a 10% premium on his preferred shares in a buyback if that happened.
That kind of deal doesn’t happen unless you know someone (and of course have a few extra billion lying around….).
In the first part of the article I mentioned how I was paid €4266 from an investment made last year. This was not a publicly available deal. This is the type of deal that only happens when you know someone. And this is not the only payment I have received. Nor will it be the last.
The €1670 I made was also from a private deal. Not publicly available. And it was from a personal connection. It too was not the first, or the last payment.
In order to find the right private deals, you need to connect with the right people, and be in the right place at the right time.
The only way to accomplish that is to get out of your comfort zone and network with the right kind of people. In my experience that is only accomplished by surrounding yourself with success-minded people who have achieved the things in life you wish to accomplish.
Personally I speak at 15-20 conferences per year as well as attend a few others. I am traveling every month and visiting 30-40 countries per year on average. And while I enjoy the travel, I am not on a perpetual holiday.
I am meeting with lawyers, investors, project managers and deal makers. My boots are planted firmly on the ground meeting with the right people scouring the globe for these deals with my personal connections.
I would encourage each of you reading this to do exactly that. You may not have the ability to travel as much as I do, but take a few trips per year. Attend a few conferences. Join local networking groups. Maximize your time to find and meet with connections in that locale.
I highly encourage you to reread this article and take it to heart. Creating multiple streams of income, compounding your passive investments, and networking with the right connections has had a tremendous positive influence on my life.
It will on yours as well.
Until next time, live well.