I want you to picture in your mind what “striking it rich” looks like. Close your eyes for a second and think about it.
Most people think that striking it rich means coming into a lot of money all at once…
A huge inheritance. A lawsuit settlement. Hitting a jackpot on a slot machine. Winning the lottery. Those kinds of financial windfalls do happen. But they’re rare. Extremely rare. Most wealthy people did not get rich by a stroke of luck. In fact, just the opposite.
In just a moment we’re going to share with you a single little secret that could completely transform your life.
The wealthy have used this secret for centuries to amass their fortunes.
And here’s great news for our international readers: this strategy is NOT limited to the United States. You can use this anywhere in the world.
But first a warning… This secret is nothing fancy. You may even feel insulted by its simplicity.
Most poor and middle class wage-earners will never appreciate — or believe — that rich people build their wealth using this secret.
It’s too bad. Because while they’re chasing every get-rich-quick scheme, they’ll actually be getting poorer every day. While the rich keep getting richer.
But…
If YOU have the discipline to learn and implement this one little secret to wealth, you’ll be head and shoulders above everyone else and well on your way to building your own personal fortune. How do we know this secret works? Well, all the ultra-wealthy use it.
In fact, there is a particular man who has gone into detail about this secret and he built a $50 million empire primarily using this and a few other wealth-building secrets.
Are you ready for the secret? Here it is:
Invest for Income, Not for Capital Gains
Told you it was simple.
But before we go any further, let’s make sure we all understand what a capital gain is.
In short, it’s the profit you make when you sell something. If you buy Apple stock at $300 and sell at $500, you have a $200 capital gain. If you buy a house for $150K and sell it for $250K, you have a $100K capital gain. This is how most of the middle class thinks wealth is created. Buy low, sell high. It’s the model of investing that’s been drilled into the middle class for an entire generation.
It works great when the stock market or house prices are going up. But it’s a curse when that trend reverses.
In fact, it’s such a curse that Mark puts it this way…
The Rich Hate Capital Gains
To explain why, here’s a little quiz:
Let’s say you and I are good friends. I own a successful business. You have $100 to invest and you decide you want to invest in my business. You verify that my company has grown by 500% per year over the last few years, so you’re excited and ready to invest right now.
I give you two choices:
1. You give me $100 right now. I promise to give you $10 in six months. Then at the end of the year, I’ll also promise to give you back the $100.
2. I’ll take your $100 right now, and at the end of the year, I’ll pay you back according to the percentage my company grew. Since my company has grown 500% per year in the past, you could easily make $500 based on past performance.
Which option would you choose?
A surefire $10 with no loss of principle (what you invested) … or the chance to turn your $100 into $500 in one short year?
Be honest.
Most people choose #2, even if they SAY they’d do #1. It happens in real life investing, too.
People love to chase the big-payoff. You see, we all have a kind of get-rich-quick gene hard-wired into our nature. We think if we can just get that one big payoff, then we’ll be set. Get lucky once and we’ll finally be rich. That’s not how the wealthy think.
The rich will almost always pick option #1 in our little scenario. Why? It’s a sure thing.
In our story above, the smart, wealthy investor would much rather take a fail-safe return without risk than to shoot for a potentially huge – but uncertain – capital gain. The rich rarely get the thrill of a huge payoff. They don’t mind, though, because they know they won’t get the agony of a catastrophic loss, either.
See, the rich don’t invest because it’s fun or exciting. This isn’t a game for them. It’s about making money. Period.
Investing the Wealthy Way Helps You Sleep Well at Night
Wealthy people live with less stress than the average middle-class investor does. And it’s not just because they have oodles of cash at their disposal. It’s because the wealthy know exactly what their investment money is doing. They don’t have to obsess about the ups and downs of the market. The typical small investor who buys into the stock market is hoping for a large – and quick capital gain.
He has to ride through a roller coaster of emotions every day. On up days he’s smiling wide … maybe even a little bounce in his step. On the down days he’s sweating it out … glued to his computer screen … monitoring every new dip in price … nervously hovering his finger over the computer mouse fighting every impulse to click out at a loss before there’s even more carnage.
The wealthy gal who’s invested with a safe option – say a corporate bond – knows she’s going to get her money back at a set time in the future. And she knows she’s going to get a predictable, predetermined return.
Once she makes the investment, she’s free to live her life to the fullest and sleep well at night. She doesn’t have to worry about her investments.
It’s just like option #1 in our example above. You know you are going to get your $100 back, plus $10 to boot. It’s fool-proof.
This investment mindset allows the wealthy to make plans. To wait for opportunities. To grow a little richer every day. The speculator has no way to plan. He can only keep his fingers crossed and HOPE his “investments” go up in price. Hope that he hits the jackpot and scores a big capital gain and pray there isn’t another 2008-like crash!
Grow a Little More Wealthy Each Day
If you want to truly become wealthy, you need to start investing like the wealthy. Grow a little wealthier each day.
The simplest way to accomplish that is to invest for income, not capital gains.
Only invest in things you really understand, and NEVER lose money.
The only way he found to predictably do that was to avoid capital gains investing like the plague.
The Way the Wealthy Invest for Capital Gains
You may be thinking: “Wait a minute. Haven’t wealthy people have made a LOT of money on capital gains? Surely some wealthy people invest for capital gains?
The answer is yes. The rich DO invest for capital gains, but it’s in their own business. In fact, most of the ultra-wealthy got that way because they built a business from the ground up. But what we’re talking about here is how they keep and grow the wealth they’ve accumulated.
As far as investing outside their own businesses, some wealthy people do invest for capital gains (although many never do).
But they do it differently than the average middle-class investor. Here are their secrets to success:
• They only invest a small part of their portfolio in speculative investments
• They only risk an amount they’re willing to lose
• They only invest in something that makes sense for the current wealth cycle (like precious metals right now)
For some, it’s as small as 2% of their portfolios. Others may risk up to 50%, but that’s about the limit (and only if they are willing to lose it all).
As the proverb goes, “a bird in the hand is worth two in the bush.”
It’s a set of simple strategies packed with a lot of profound investing advice.
And it might be just the inspiration AND information you need to help you make your own fortune.
To learn more check out this 100 page easy to read book