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Will a good financial adviser create wealth?

Many in the financial planning and wealth management industry want you to believe they hold the secret to creating wealth. They’ll guide you into the right investments. They’ll use their superior technical skills to minimise tax. And, perhaps, they’ll suggest you borrow and invest to accelerate your wealth accumulation.

Some would want you to believe they can perform the financial equivalent of alchemy. But, realistically, the best a truly competent, professional adviser can offer is to help you develop and effectively use the financial resources or capabilities you already have.

In saying this, we do not want to denigrate the value of good advice. It can be substantial, particularly compared with the damage that can result from poor advice or naïve do-it-yourself wealth management attempts. But the ability to provide that value does depend on having some good raw material to work with.

The inescapable truth is that unless you are born into riches, lucky or successfully take inordinate investment risk (either consciously or unconsciously), you are your primary source of wealth creation.

Your wealth depends on your projected surplus capital …

For most people, the further they are away from planned retirement the more likely it is that their most valuable asset is the ability to generate income from work. Either from their own direct employment or running a business that employs others.

But it is not simply their income that is most important for building wealth. Rather, it is the difference between their after-tax income and the amount they spend. This is free cash flow that can be used to purchase investments or repay borrowings.

An estimate of the lifetime value of free cash flow can be made by summing the best guesses of each year’s free cash flow (in today’s dollars) from now to your proposed retirement age.

We call this amount your “projected surplus capital”. For somebody in their 30’s or 40’s, its value may far exceed existing net investment wealth (i.e. investment and superannuation assets less borrowings).

Consider the simplified, hypothetical example of a recently qualified, 35 year old medical specialist and his family. Currently, their net worth consists entirely of the family residence worth $1.5 million. It is regarded as a lifestyle asset, rather than an investment.

Over the next 25 years to his proposed retirement at age 60, the doctor’s best guesses of the annual averages of the key inputs to the calculation of projected surplus capital are as follows:

1. Gross Practice Fees (p.a.)                        $750,000
2. Practice Expenses                                    ($250,000)
3. Net Practice Income (=(1)-(2))               $500,000
4. Net Tax Payable                                        ($150,000)
5. After Tax Income (=(3)-(4))                      $350,000
6. Spending on Lifestyle                               ($225,000)
7. Free Cash Flow (=(5)-(6)                        $125,000 p.a.

Estimate of Projected Surplus Capital = $125,000 p.a.* 25 years to retirement = $3,125,000.

This projected surplus capital, plus the value of the family residence, is the best guess of the family’s wealth in today’s dollars at the doctor’s age 60. His future wealth depends on him being able to deliver on these free cash flow expectations.

In such circumstances, a good adviser will help ensure, among other things, that:

* the doctor pays no more tax than necessary;

* as capital is realised, it is allocated between lifestyle and investment assets consistent with the family’s objectives;

* an investment strategy is implemented, designed to maximise expected return for risk taken; and

* the family’s desired lifestyle is protected in the event of a major insurable catastrophe.

There also may be valuable advice given about running the business more effectively and / or achieving a better work /life balance. But the focus of the advice is more about managing, protecting and, perhaps, enhancing wealth rather than directly creating it.

Increase projected surplus capital to create wealth …

So if wealth managers and financial planners can’t make you wealthy, what is the “secret” to wealth creation. Please keep it to yourself, but here it is:

“For people in the wealth accumulation stage of their lives, they need to be able to generate free cash flow – essentially, spend less than they earn.”

What an insight! So obvious, a huge percentage of the population misses it entirely.

And, it gets better:

“If you want to increase your wealth, then you need to find ways to increase free cash flow and, thereby, increase projected surplus capital”.

Earth shattering!

But think about it. If our doctor could increase his after-tax income by $25,000 p.a. (i.e. by 7%) and reduce his lifestyle expenditure by $25,000 p.a. (by 11%) free cash flow increases by $50,000 p.a. Projected surplus capital increases by $50,000 p.a. * 25 years = $1,250,000. An effective increase in investment wealth of 40%!

Your investment banker or stock broker will not offer you wealth creation opportunities like that. And with no investment risk and, largely, under the doctor’s control.

Wealth Foundations is an independently owned personal financial advisory firm that offers wealth management and strategic financial planning services. For more information, visit Wealth Advisers.

Article Source:http://www.articlesbase.com/wealth-building-articles/the-secret-to-wealth-creation-1462870.html

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What if there was one thing that you could do that would guarantee your a financially free future, would you do it? Well, if you said yes then you need to begin creating multiple streams of passive income right away. Passive income is the key to unlimited wealth and financial freedom, and anyone can use this wealth building strategy to create a lifestyle that most only dream about. Passive income, two words that have the magic to change any financial situation into one that thrives.

Before we talk about what passive income is, let’s first make sure that we all understand what it means to be truly financially free. Many people think that they will become financially free when they get a better job, get a raise, or begin working for themselves. Sure, these things can give you more money, but money alone does not create freedom.In fact, many people who look financially free are not. They may have a lot of money, but they may be working huge hours every week and living check to check.

To be financially free in the truest sense, you must have all the money you need to live however you choose, but without the obligation to work. And this is where passive income comes in to the equation. Passive income is automatic income. When you have a stream of perpetual income that generates on its own, without you having to do anything, you have successfully created a stream of passive income. There are many ways that anyone can use to build passive streams of income. Some popular methods include website hosting, rental real estate, network marketing, automated offline businesses, royalties from books, coin operated machines, and online marketing. There are a lot of simple internet income sources that anyone can also use for passive income including affiliate programs, blogging, and social networking when done correctly.

It all starts with one source of passive income, and another, and another. Because each stream of income is automated, there is no limit to the amount of money you can eventually generate. And when you have enough ongoing income to pay for the lifestyle that you have chosen, you my friend are financially free. That means that you have an abundance of money and the free time to enjoy it fully. Therefore, to become financially free, you need to start with a goal. Your financial freedom goal will be to create enough passive income to pay for your desired lifestyle. Do not cut yourself short. How much money would you ultimately like to live on? That is your passive income destination.

Here are a couple easy ways to create passive income….

Create Your Own Digital Products-Anyone can package their information in a way that it can be sold online. You do not need a physical, tangible product to make money with internet marketing. You can write an ebook, design software, create e-cources, etc., and sell them through your own websites as well as through affiliate marketers.

Marketing Other Companies Products-Maybe you do not want all of the hassle of creating, packaging, and marketing your own digital products, but that is ok too. You can become an affiliate and sell other people stuff for a commission

Online MLM/Network Marketing-Similar to affiliate marketing is network marketing, also known as MLM. Despite the bad rap that MLM programs have gotten by many people, they really do offer huge earning potential for motivated entrepreneurs

Ben is a young entrepreneur who has several successful businesses under his belt, and enjoys sharing information on a wide range of business, financial, and entrepreneurial topics. Visit Passive Income Pro and the Passive Income Blog

Article Source:http://www.articlesbase.com/wealth-building-articles/what-is-passive-income-and-why-is-it-key-to-unlimited-wealth-1650884.html

As you may have noticed, passive income does not come without effort and time. You can invest money rather than time and energy, but unless you are already wealthy to an extent, you will not have enough to invest so that you could generate a substantial income. The alternative is to invest your time, energy, and attention, either into free or low cost business opportunities, or to budget and save your money if you choose to go the investment route later on. Many people are only able to work at their passive income ventures in their spare time, but even small time investments, over time, can accomplish anything. Often times it requires many month of planting and watering passive income seeds before the cash flow starts, which is why many people give in too soon.

But it’s worth it, no matter how much time it takes. The result is freedom. The freedom to live life without money worries. The freedom to live without the obligation to work, unless you want to. The freedom to do what you want, when you want. Financial freedom gives you the ability to live the way you really want to live without sacrifice, limitation, or obligation. Wealthy people understand and make use of the principle of passive income, and most of them earn money from a number of diverse sources. Some are huge streams of income and others are much smaller, but together they create a huge automatic income that leads to the building of unlimited wealth.

Developing a lifetime of wealth starts with a single passive income stream, and then another, and another. When your income is automatic, you do not trade time for money, therefore you can earn without limits. And when you have enough ongoing income to pay for the lifestyle that you have chosen, you my friend will have achieved financial freedom. That means that you have all the money you need and all the time you want to live life fully. Therefore, to become financially free, you need to start with a goal. Your financial freedom goal will be to create enough ongoing automated income to pay for your desired lifestyle. Do not cut yourself short. How much money would you ultimately like to enjoy spending each month? This number should be your goals for automatic income. See, wealth is not about a specific number, it’s a lifestyle. You choose the lifestyle you want, and when you are living it without worry of financial issues, you will be wealthy in the deepest sense.

Here are a few great ways to earn passive income if you are interested in getting started…

Make and Sell Your Own Information Products-Package and sell your own informational products. They are easy to create, and if you set up automatic sales systems like websites and mailing lists, you can sell them on complete autopilot.

Marketing Affiliate Products-Anyone can join free affiliate marketing programs and make money by earning affiliate commissions by promoting the products to others. Use a website and a mailing list to automated your sales.

Network Marketing-Multi level marketing has always been a great way top get rich, and doing mlm online is even more simple and profitable. Building a large residual income will be a huge asset for your financial freedom.

Ben is a young entrepreneur who has several successful businesses under his belt, and enjoys sharing information on a wide range of business, financial, and entrepreneurial topics. Visit Passive Income Pro and the Passive Income Blog

Article Source:http://www.articlesbase.com/wealth-building-articles/creating-unlimited-wealth-and-freedom-through-passive-income-1650894.html

Rich people know that you do not get rich earning money from a single source. To earn big bucks and become financially free, you must begin developing multiple streams of passive income. To many people passive income seems like a myth. They have heard of it, they know people who earn it, but they do not understand how simple it can be for anyone to create it. But it is simple and possible for anyone to begin developing multiple streams of passive income.

There are many, many vehicles that people utilize to generate multiple income streams and huge passive incomes. But essentially they all come from two basics types: Business Passive Income and Investments Passive Income. Each one has its own benefits, and one form may interest you more and be better suited for your current situation.

We all know that money can be used to make more money, but most people do not use this knowledge to their advantage. But savvy wealthy seekers look at every dollar as a “seed” that they can plant that will produce more dollars over time. Investment passive income is earned when you invest your money in reliable investments that earn you returns without you having to do anything.

The other option is to create an automated business, which can be done in thousands of ways, that works on its own to generate profits for you around the clock. This is a great idea for wealth seekers who are just getting started and do not yet have enough money to begin in the investment world. There are many ways to start income streams online with little or no money.

Many businesses are ran without the owner being present, yet the owner is always making money. Owning a business can be a terrific way to build streams of passive income. Just about any business can be automated, and there are plenty of business models that are simple yet powerful that anyone can utilize.

Do you know what a major hobby of the average self made millionaire is? Investing. Wealthy people realize that money can be used to earn more money, and they see every dollar they bring in as a seed that can be planted into a passive income investment that will produce ongoing returns. It can take time to develop enough capital to begin investing enough to earn substantial returns, but learning about various investment vehicles now an give you a greater advantage when you are ready to invest.

There is one huge difference in the mindset of a wealthy individual (or someone who will be wealthy) and those who never seem to get very far with their financial goals. The difference is that successful people realize that by learning from those who have done what they want to do, they will have a major advantage for success. People who think they already know everything usually do not achieve great things. Start now learning all about passive income, as it is the key to unlimited wealth.

Ben is a young entrepreneur who has several successful businesses under his belt, and enjoys sharing information on a wide range of business, financial, and entrepreneurial topics. Tips for Entrepreneurs and take a look at Millionaire In the Making

Article Source:http://www.articlesbase.com/wealth-building-articles/finding-the-golden-key-to-unlimited-wealth-1650937.html

Gold  Appreciation in Value Brings  Good Wealth

Gold Wealth , A long Term Investment .

About 20 years ago, Leon Richardson wrote 2 articles about the market of Gold. They are “Catch Them Young” and “A Golden Chance”. These 2 articles gave people an insight of the market of Gold, and what we can expect of it. Quoted from his article, Mr Richardson’s main reasons for favoring the idea of investing in Gold is that; Gold is an overdue market for a rise since 1980s .

It is also because, Gold always offers a stored value for investors to hold on to. In “A Golden Chance”, he also gave reasons for the upward trend of Gold; most mines have stopped selling their gold; US and Canada has slowed down production and there are more buyers than sellers in the market.

However, his prediction lasted much longer than what everyone hoped for to appear. It took nearly 15 – 20 years before the Gold market started to really move. Between the 15-20 years, the market remained stagnant. A stagnant market has cause many people to be unsure and is very difficult for anyone to speculate the next cycle. Thus, it has caused many investors to withdraw along the years as well, some has even made losses, due to other factors related to exchange rates mainly, and oil prices  were a dull since before 2000.

Even so, now, the Gold market has started to rise at an “over-over-due” rate. Currently, the economy is in a crisis, the US-dollar has fallen drastically, period. And when the banks, such as Lehman brothers, started to collapse, the Government decided to save them by placing trillions of dollars into the economy save it. However, this has caused a great problem, “Inflation”.

This then causes the prices of goods to greatly rise through out the World , and US is the major dollar, it has caused a world-wide inflation phenomenon. However, due to China’s existence, it has helped cushioned the inflation. Having this, the prices of Gold would then definitely go up, as the amount of money in the circulation is definitely  more than the amount of Gold suppliers can provide. The more money being put into saving the banks, the higher the prices of Gold would be. And if the economy does recover, the prices of Gold would then remain at the risen point and not go down. Thus, buyers of Gold from 20 years back and have held their Gold till date, or those who have in recent years bought Gold, have definitely gained from this “crisis”.

From this trend, we can see that Gold is indeed a very LONG-term investment. This is due to the fact that Gold prices are not easy rise, as its’ base prices is already quite high for buyers. It would be considered and inelastic luxury good, to many out there. Thus, in-order for one to invest in Gold, one must have a good amount of surplus in income at hand and is willing to place their money in it like a dead-weight. Otherwise, it would be unwise for just about anyone to invest in Gold.

Source : http://seowealthsblog.blogspot.com

Disclaimer : The above article is not  to serve as an investment  tool or guarantee nor promise of guarantee rise of gold price in  the future. The  reader thus agrees that the author and publisher are not responsible  for the  rise  or fall of gold prices ,nor reader’s business decision relating to the information provided in the articleGold  Appreciation in Value Brings  Good Wealth

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Article Source:http://www.articlesbase.com/wealth-building-articles/gold-appreciation-in-value-brings-good-wealth-1630318.html