I would like to share with you my unorthodox Wealth Building Principles which have been guiding me for quite some time now. These principles have been instrumental in shaping my perspective on wealth, and I believe they can benefit you as well.
10 Rules of Wealth Creation:
While investing is an important aspect of building wealth, it is just a small part of a much bigger picture in life. As you may have noticed, this blog is named after my two greatest passions: Stoicism and Investing. Therefore, these principles reflect my broader ideologies on how I view wealth.
I understand that not all of these principles may resonate with you, but I believe each one plays an important role in achieving a well-diversified life just like a portfolio. Each principle has helped me immensely in not leaning too much in one direction.
Many people despise wealth and money, often associating it with greed. However, I want to make it clear that this is not the case for me. You can be philosophical in life and still have money. Money is not the root of all evil, contrary to popular opinion. It is just a tool, a resource. How it is used reflects the values of the holder.
Money gives me options and independence. From a young age, I wanted to be financially free and independent. Creating wealth has helped me to achieve this goal.
There are many types of Wealth. Financial, health, time and social. A truly wealthy life involves all four.
Everyone has a different goal and motivation in life. Many want to retire young and early. I’ve never advocated retiring early although I can, because I love what I do and want to do this indefinitely. Things happen though like the old quote, “Life is what happens when you are busy making plans”.
What is not on the list but incredibly important is Gratitude. Be grateful for what you have and sometimes what you don’t. Don’t create an unsatiating appetite for more that nothing can quench. Gratitude has been most helpful in keeping me on the right path.
There are no shortcuts to building wealth. If it’s easily gained it is easily lost. There are 4 stages to the wealth-building journey. Acquire the wealth, Protect the wealth, Grow the wealth, and then share the wealth.
Rule #1 – Never let Wealth interfere with your Duties.
It’s important to prioritize the things that matter most to us. For me, as a married parent, my family and home responsibilities come first. Even if I have big goals, I can’t neglect my daily duties to home, health and family. My wife and my sons deserve my time and love. My health is also a top priority, both physically and mentally. I work out regularly to keep my body and mind strong. I practice stoicism to help me handle the stresses of business, family, and personal challenges. At the end of the day, duty always comes first.
Rule #2 – Develop a healthy relationship with Money.
Money is a resource that can be used to achieve many things, but it cannot bring you happiness. While it may bring temporary happiness through extravagance and buying things to fill a void, once the initial excitement fades away, the emptiness will remain. It is important to develop a healthy relationship with wealth and understand its limitations. Having money is certainly better than not having it, but it does not guarantee happiness. I have experienced being both broke and rich while still feeling miserable. It is important not to let money change who you are and not to take yourself too seriously. Money can corrupt your mind and inflate your ego, so it is crucial to remain humble.
Rule #3 – Frugality is a Way of life.
I have always been a frugal person, regardless of how much money I have made. Even my wife makes fun of me for being a miser. I grew up in a low-income household where we had next to nothing, and this has influenced my spending habits from an early age. My mother was especially wise in stretching our money, and I was fortunate to inherit her wisdom.
I am a firm believer in living below my means, and I have consistently managed to avoid lifestyle inflation for the past 15 years. Although I do spend money, I try to live minimally, only spending on the essentials. This lifestyle was not always my choice, but as I have been travelling with my family permanently, it has become a necessity. Once I achieved financial freedom and independence, I continued to save, aggressively invest in stocks and property, and maintain my frugal lifestyle. Living below my means has significantly accelerated my wealth creation goals and independence.
Rule #4 – Debt is not my friend and can destroy wealth.
Debt is a highly debated topic, especially when it comes to using other people’s money to create wealth, leveraging to buy property, and other debt-based wealth-creation tools. While they do work, I am personally against taking on debt. In my first decade in the property sector, I used debt aggressively and at levels that would make people uneasy. But I decided to never borrow again, and I have stuck to it. Once I became financially independent, my risk appetite changed.
Accumulating wealth is just as much about avoiding mistakes as it is about working hard and making smart decisions. I choose to own everything, have no debt, and eliminate risk. I understand that this is not possible for everyone just yet, but becoming debt-free at a young age has helped me accelerate my wealth-building journey by reinvesting all profits and cash flow into more assets without having to service any debt. Becoming debt-free is an important step towards building wealth.
Rule #5 – Be a lifelong learner and continue self-education.
Learning is a lifelong process and is extremely important for building wealth. Relying on the same knowledge and strategies that helped you in the past may not always work in the future. Therefore, it is crucial to cultivate the habit of self-education to stay ahead and be prepared for any challenges that may arise.
I am constantly learning about various topics, and while I tend to focus on the areas I am passionate about, I also study broadly to enhance my knowledge base over time. It is important to test your knowledge regularly, as it is easy to forget what you have learned if you do not use it. I like to continuously challenge myself by testing my best ideas and seeing where my knowledge falls short.
It is only when we attempt to explain a concept or write it down that we realize how much we truly know about a subject. If I cannot explain something to my sons or write about it, then I know that I need to improve my understanding of that topic. By dedicating time to certain subjects, you may be surprised at how quickly you can grasp even complex ideas.
Rule #6 – Always have access to Cash.
Saving money is a great habit and an important component of wealth creation. It helps you to get used to having money without spending it, living within your means, and creating a disciplined habit. It also builds up fast and allows you to invest your money and grow your wealth further. Cash is crucial for emergency funds, independence funds, and access to cash in down markets or for life-changing deals.
Although saving will not make you a billionaire, it is still a wise financial move. I have held cash earning nothing for years and then managed to buy depressed assets in the right environment and double or triple my capital. Therefore, don’t be swayed by the inflationary debate and learn to squirrel aside money to build, protect, and achieve financial independence.
Rule #7 – Staying the course builds wealth fast.
Consistency and discipline are the keys to building long-term wealth. It’s important to create a plan and strategy and stick to it, without getting in your own way. We all understand the power of compounding, but we rarely allow the process to work. We tend to want things fast and lack patience when it comes to building a company, saving, or investing. However, I’m amazed at how wealth can accumulate after staying the course for even ten years.
This blog and these principles are not for the impatient or for those looking to get rich quickly. There are no shortcuts to making money if you want to keep it in the long run. People often look at my lifestyle now and think that it happened overnight. They didn’t see me struggling at 21 with an office in a shed with my wife and little sister helping me build my company while holding my one-year-old on my lap. There will be good and bad years, but in both cases, it’s important to stay the course. Consistency in any life-changing habit pays the greatest dividends.
Rule #8 – Invest often and allow compounding to work.
Remember the following advice: invest regularly, early on, and consistently. If you don’t want to pick individual stocks, buy an index fund and invest a fixed amount of money at regular intervals. Reinvest all dividends and let your investment grow over time. There are different financial products available for people at different levels of income. If you have no money, consider micro or fractional investing. If you can’t invest, start by saving and then invest later. You can start with small amounts of spare change and stick to an investment plan to build up your investment over time.
Take time to read and educate yourself about investing. Learn about the 5 P’s of investing and come back to begin investing. If you’re interested in property, invest in property. If you’re interested in the stock market, pick stocks. If you’re passionate about business, start a business and invest in it. Remember to invest in yourself too, by acquiring knowledge.
Don’t delay investing, and remember, you don’t have to be a financial genius to invest wisely over time. Starting early and investing consistently is often all you need to do. Even if you’re an active stock picker, consider investing in an ETF for retirement.
If you’re chasing alpha, then active stock picking may be for you.
Rule #9 – Develop a Wealth Mindset.
Developing a wealthy mindset is much more than just reading financial reports and browsing real estate listings. It requires understanding opportunity cost, trade-offs, and seeing potential in everything. When considering a luxurious purchase, it’s important to weigh the cost of that capital and think about how it could compound over time. Whether it’s buying a property, investing in a company, or splurging on something extravagant, it’s essential to weigh the cost and think about potential alternatives for compounding your money. It’s about having a big-picture perspective, working hard, and believing in yourself.
I don’t want to delve into self-help and abundant thinking, as there are already plenty of resources available on those topics. However, I believe in myself and my ability to generate Alpha, despite the Efficient Market Hypothesis. If you believe that you can’t make money, then you won’t. But with the right discipline, focus, process, and patience, I know I can beat the market. It takes courage to back yourself, but once you do, the possibilities are endless.
If you think you can’t achieve wealth, then you won’t. If you don’t believe you deserve it, then you won’t get it. But I didn’t let my humble beginnings in a small tin shed hold me back. I had a goal, a wealthy mindset, and I went after it. You can too. Think big, believe big, and don’t let anyone stand in your way.
Rule #10 – Give back once accumulated Wealth.
The joys of giving back and serving society are important. If we have been fortunate enough to accumulate wealth, then giving back to those in need if it is within our capacity is just good stewardship. I have heard it all before, “It’s my money, I don’t have to, I worked for it”. Yes, these are all true responses. However, without people, customers, society, laws, capitalism, we couldn’t create the wealth we now hold. After a certain point, giving back is pleasurable.
I have found that the more I give, the more it comes back anyway. Not only money, I wanted to give back knowledge (the very little I have) in this blog, help others create wealth to live their lives. Give back time to help people. This does not just mean charitable work, donations; it can be about creating a life of service. To your kids, to your partner, to your family. Being generous to a random person at the shops.
One story: when I first encountered a very wealthy person who ended up building orphanages, fishing villages, and schools in remote islands, I asked him if he pursued being a philanthropist. He said not at all, he just made a lot of money. One day, on travels, a poor fisherman asked if he could have a couple of dollars, the businessman reached into his pocket and gave it to him. Then more and more asked, schools asked, and he gave and gave and gave. I asked why, he said, “Well, I didn’t need it, it was in my pocket, and it was within my capacity to help another human being, so I did. That was it.”
Greed, holding on, and accumulating more than we need like a dragon coveting its gold generally does not end well.
In Conclusion…
I have just shared my personal Wealth Building Principles. I understand that it may not be exactly what people were expecting, as I haven’t covered much on how to make money, given that I have found success in various different areas. However, I have identified ten fundamental principles that have led to my wealth creation. Although my strategies, industries, business ideas, and investing philosophies may have changed over time, these principles have remained constant. I hope that these principles will be helpful to others in their own wealth-building journey.