In the second part of this blog post series I’m going to talk about my top tips for Life Leverage. The second of which is about leveraging money. In the first part of this series we looked at Leveraging people and skills.
You can work hard for your money, or your money can work hard for you. You can be a slave to money, or money can be a servant to you. You can exchange time for money, or you can build assets that create passive income that preserves your time.
The ONLY way to create income and capital, and still preserve time, is through assets. You invest time and capital (where relevant/necessary) in assets that produce (passive) income. You set them up, get them managed by people or systems, then you exclude yourself from the operation of them.
The type of assets you can build are:
> A business (physical or eCommerce)
> IP (ideas/patents/licences/information/music)
> Investments (stocks, bonds, paper, etc.)
> Money lending
> Physical (precious metals, art, watches, wine, classic cars)
> Partnerships (franchise, joint ventures, etc.)
If you don’t have any of these working for you, you will be working for your money. You will be spending your time preserving it rather than investing or leveraging it.
When you start investing, you should look for relatively low risk investments with a relatively low knowledge barrier. Stocks, property and a business venture you have knowledge in are probably the lowest barriers from a standing start, as the risks are low compared to more volatile or speculative alternatives (if invested properly.)
In an economic sense, an investment is the purchase of goods that are not consumed today, but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or appreciate and be sold at a higher price.
There are 6 levels of using money. You have to move up the ranks, knowing how to spend, save, invest, speculate, insure and finally give. The more knowledge you acquire at each level, the more money you will make.