The Logic Group posted on August 26, 2009 19:05
Everyone should develop a wealth building plan. Unlike a financial plan, a wealth building plan focuses on effectively turning effort into wealth. Thus, it recognizes the fact that the right effort and skill can create wealth and seeks to effectively maintain and grow that wealth.
There is a big difference between creating wealth and preserving or growing wealth. The traditional financial planning community typically looks at investments that grow or preserve existing wealth. Creation of wealth is not in their playbook. The fact is that stocks and bonds will not make you rich. However, the proper mix of stocks and bonds can help you grow wealth that you have already created, especially over a long period of time. On the other hand, if you are interested in creating wealth, then you need skills and a focused effort, not just passive investment vehicles.
People tend to focus too much on the vehicle they think will make them wealthy. The point is not the vehicle. For instance, right before the housing bubble burst people got carried away with the notion that being a real estate investor was the easiest way to become rich, and that all you had to do was roll the dice, and you would be successful. The truth is that real estate is a business just like any other business and those that are successful in that business are the skilled business owners. While it is true that some people can get lucky making money by being in an asset class during a bubble, they are not likely to be able to keep that money when the bubble bursts. Even those who get out before the bubble bursts are likely to have a false sense of accomplishment, which will lead them to lose the money in their next venture. In other words, luck is not skill, and it is a lousy game plan.
Americans have always had a “get rich quick” mindset, and it is to their detriment. What you should focus on is tuning your business skills, which are relatively universal skills, and then applying them to a field that you enjoy by way of business ownership. This will help ensure that you are successful and find your physical efforts rewarding.
The entrepreneurial spirit is what built America. We must respect it, protect it, and honor it. Unfortunately, just as we do not teach money in our school systems, we also do not teach our youth about the rudiments of business. Therefore, we all need to do our part to correct this deficiency by actively highlighting the entrepreneurial spirit in our own lives and in the lives of others through better education. Only this will keep America strong. More needs to be said about the flaws in our educational system, but that will be the focus of another article.
If you have not already successfully created your wealth, then you should look at business ownership as a skill set to learn. The skills of running a successful business can be learned, although you will have to put in the time to learn these skills. Running a business does require taking on risk, and there is little you can do to mitigate this. Many people are unwilling or unable to take on this risk, and generally they will not attain real wealth. This is natural, and it is necessary, because the world’s businesses need employees. When developing your plan you need to understand who you are and realize that if you are unable or unwilling to take on the risks associated with owing a business, then you are going to have to be a very efficient saver, and the deck is stacked against you. However, if you learn the skills, take on the risks in a reasoned way, and apply your knowledge with effort, the world could be your oyster.