Expressed opinions Entrepreneur Contributors are their own.
Published a 1970 article Journal of Personality and Social Psychology A detailed study where children were offered the option of receiving one treat immediately or waiting 15 minutes and receiving two treats. The results, which were replicated in additional studies, were published in aggregate Science Magazine, that children “… those who are late for satisfaction… have developed into more cognitive and socially competent adolescents, have achieved higher educational performance and have better coped with depression and stress.”
In business (including investing), the same kind of delayed satisfaction – known in the economic world as “low-choice” – can also be a unique way to make a profit.
Even if someone with an excellent salary or a healthy company has a “high time priority” they can be poor, in other words the focus is mainly on the present. On the other hand, someone with a poor background can be rich with less choice and proper training. Those who fail in property or business often prefer the former, and so they give up before they succeed, or succeed and then they spend the money they earn instead of reinvesting.
I didn’t start with much in life, but the short-term choice allowed me to create a multimillion-pound net worth through UK real estate. Of course, skill is essential to doing anything well, but regardless of your skill level, choosing a high time will keep you away from true success.
“Fast pound” vs. “slow pound”
These general expressions (if you are not in the UK, choose the currency of your choice) refer to two business and investment strategies: one that makes money now and one that creates your net worth. Ideally, your fast pound should be used to invest in your slow pound structure. That way, over time, you’ll be getting richer instead of spending more money.
An example of this in the property investment world is becoming a deal source (fast pound) – that is, finding and selling property deals to other investors and using the money to invest in your own property (slow pound).
Essentially, you need to find an income-generating asset to buy with your earned income, including reinvesting it into a business growth. Creating a slow pound strategy before you make any money seems like the most helpful to me, but as you do, put it aside and get ready to invest.
Related: I have learned 3 lessons by helping my employee to be financially free
Buy luxury with passive income
When you start, you probably need to buy anything you need with a quick pound income, but it is important to pay for any luxury using the passive income generated by your slow pound strategy. This is what businessman and author Robert Kiyosaki teaches in his 2017 book, Rich Dad Poor Dad: What the rich teach their children about money that the poor and middle class do not!. Learning this lesson has helped me grow my asset portfolio to today’s size. This allows you to reduce the time you spend on luxuries and free up your return on investment.
An example of this policy is my house: my wife and I bought our £ 3,000,000 house with passive income (we rented it out a few years ago) because I classified a house as a luxury – with the capital you can invest in income – wealth creation. . I always suggest that people only buy a house if they are luxurious Really Want to splash out, and only once you have the slow pound income to do so.
So, if you want a luxury item, a car, an expensive vacation or a home, wait until you can afford it with your passive income (i.e. your slow pound). It is a key to wealth creation that is often overlooked in the education system. At school, they usually describe earning money as a job product rather than a business, but then do not instruct students what to do with that money; The answer is kept secret that the rich teach their own children, but that never comes to the public. One of the things I picked up early in my career was that once I made it, I would talk about how I did it and it remains an important part of what I do today.
Related: 5 Steps to Buying Your First UK Investment Property
Retain assets in the long run
Everyone knows that you are meant to buy less and sell higher, yet most buy higher and sell less. When the market feels like everything is going up forever, everyone wants to buy. Once the price seems to go down forever, everyone wants to sell. The strategy then is to buy something that will make a good income regardless of market value. If you do this, you can hold on to wealth through recession without worrying about the price.
In real estate, this means buying a property that generates reliable rental income. Rents are usually less affected by the property market downturn than home prices and if you have a good cash-flowed property you can put through long-term market turmoil. Once the market is restored, you can then refinance or sell the property and use that money to reinvest. (Refinancing is usually more understandable, since you maintain a cash flow from the original property and do not often have to pay sales tax.)
Reducing your time choices is an important step towards success in any endeavor in life. If you can do this, you are determined to create a generational wealth for you and your loved ones.