I have tried to simplify a complex topic---it needs to be simple ---it IS simple
The following will have examples not that I'm suggesting that the examples used are
right for you or anyone. But When I was where you are I heard most of what Im about
to post but didn't know what I should do with it or how to best use it. I found MY WAY
(2) Compounding Multiplication
Money makes money
We've all heard this adage.
Sad fact of life is the more you have the more you can get
So as a few have mentioned you need to form a base and to
do that we "Generally" start with selling our skills for an Hourly rate.
Educated or uneducated skill.
The aim is to have surplus and the more we have the quicker we get to
being able to move forward financially. With this trade off of Time for $s
the power of one and perhaps 2 with a partner is limited.
This leads us to (2)
As this post progresses you'll see me come back to this very powerful tool.
Lets start with the basics.
How do you earn more
* Get paid more
* Work more hours --2 jobs etc
* Duplicate, then Duplicate again your expertise.
Again generally you'll need to be doing something where your NOT working for
Lets say Im a masseuse---I can do 6 a day at $90 an hr. 4 Days a week.
I set up a small practice with Mobile Masseuses and take $30 from each
massage I book for my team So If I have 5 others I can make $150 an Hour
on top of my $90/Hr. for every hour I have booked . $30 for just one.
* Hairdresser similar
* Lawn mower man
* pool cleaner
List is endless.
Now that we have surplus we can Multiply with the help of other peoples money
They give it to us Cheaply and If we use it wisely we can now Buy stuff to COMPOUND or MULTIPLY
I own Excavators ---a lot of them. I learnt a long time ago that People will pay $150 to $250 an hour
for these with a cost of around $80 an Hr to Employ someone and run them.
I discovered that If I added an attachment to these machines not only would they be in more demand
but a $20K attachment bought the Hourly rate up from $150- $250 to $230 to $330/Hr and STILL
the same costs to run and operate. (Rock Breakers and Drill Pile Rigs).
So Back to (2) Keep doing more of the same Build the business and they will come/They came!
which adds to (1) and makes more of (2) available.
Houses Same Principle.
Lend at 3% get a capital gain on the property of 5% on 20% down Im getting 10% on my investment
if its 7% then its 25%
If I do it 3 times its getting serious if I do it 10-20 times its very serious.
Here the benefit is using OTHER PEOPLES money they only want the interest and you take the
CAPITAL gain on THEIR MONEY!
You can now actively continue to search out opportunity with the skill needed to take advantage of any
perceived opportunity you may identify.
What ever that maybe---often its not an opportunity to others.
EG Back when----
* Bit coin
* Gold at $250 an once
* Stock Market when Trump came into power
* The Housing boom
* The Tech Boom.
The list again is endless and growing.
Opportunity in itself is worthless UNLESS
(1) You can Identify it
(2) You understand how to take advantage of it.
(3) You actually DO IT
Once your here you have a basic grasp of
The fear of loss is the single most prevalent reason people do nothing
even if they see Opportunity standing in front of them screaming!
Behind Capitalization. Back when I was buying houses as quick as Banks would
make funds available pretty well all my friends thought I was Crazy.
To me if other people paid all my costs and the bank didn't want any of my capital
gain---I thought the Banks were Nuts.
My Office manager bought 3 and a builder mate started Building 1 for one.
1 for a client and at the same time one for him. Still does but more for him.
The other friend I had did nothing!!---Sorry humor--sad!
There is much written on Risk.
With my excavators I looked and look at it this way. $150-200K to buy
If all turns to crap A direct cost of say $30K in any one year as they are worth
around $30K less. Thats around 3 weeks of work.
Low risk in my view plus Ill get a tax deduction so more likely nothing!
Every opportunity will have a different way of handling its perceived RISK.
Find it and Apply it.
If you have to use it--USE IT.
There is endless opportunity out there
Start at one and work to 5
Go and build your empire and only look
back in reflection NEVER regret.
Most liked posts in thread: Seeking a bit of guidance
The graphic is a representation of a wealth creation plan
Having a trading plan is about creating an extraordinary quality of life, living life on your terms and the graphic somewhat displays what is required to achieve this aspiration. Happiness is really about creating an extraordinary quality of life. Money and financial independence can have a significant effect on everything from our psychology, to our health, to our relationships.
Read the 'Dump it here thread'
The 'Dump it here' thread can be found here: https://www.aussiestockforums.com/posts/1005967/
It's a blatant plug for you to start reading the thread it will explain most question without you even asking.
My free eBook
Trading Fundamentals - Skate's Beginners Version eBook
When you are starting from a low capital base, the best thing you can do to increase your wealth if increase your weekly savings.
Focus on savings, for example if you can live off one income and save 100% (or at least 50%) of either yours of your wife's wage you will be able to grow your savings very rapidly.
Once you have you have your savings accumulating, then the next step is to put it to work in ways it will be protected from inflation and generate income that can be reinvested and create a compound growth explosion.
To achieve the inflation protection, and income you can invest it in a range of assets including Real estate and businesses, and there are many ways to do this, but the right choice for you will depend on your skill level and the amount of time you want to spend managing it.
For most people exposure to a local and global index of shares and ownership of their own home, and will provide decent returns over time with minimal fuss.
I would avoid any complex investment schemes unless you fully understand it, and can explain to your self how the scheme makes money.
Also, now that you are married look at taxation issues if you have any. Tax is your enemy to saving. The more tax you pay the less you will save.
You should always look to minimise your tax legally. By that I mean now it's the time to share your tax burdens with your wife. For example if you are earning $91,000 per then you are paying 37% tax plus medicare. However if your wife is only earning $15,000 then it would make sense to put new investments in her name as there is no tax to pay until you hit $18,201. This is important if you get interest or dividend payments as you will pay less or no tax in some circumstances. Here is the ATO Individual Income Tax Rates for 2020. Try to balance out and reduce your combined income tax. Save on tax and put the money towards your investments.
I've also heard of some micro investing apps that let you can drip feed low amounts of money into investments. I've seen one that charges only $2.50 per Month. You would need to research these as they weren't around when I started out. More info here that may help you. https://www.canstar.com.au/investor-hub/micro-investing/
Good luck with your journey!
Firstly well done with your investments so far
Putting spare money at regular intervals into the market over a long time horizon, 5+years, is the key imo. ETFs are a great place to do this as they give you easy diversification when using a small amount of capital.
I think you already have a good plan formulating there and Im sure other members here will give you further guidance and ideas you can consider.