Jun 17, 2010
Why Profits and Not a Paycheck Create Wealth
The ability of a person to create income that goes beyond his paycheck without him exerting too much work hours is the factor that separates an employee relying on his paycheck alone than an employee who relies on his paycheck but also has managed his regularly received paychecks well in order to create another source of income that doesn’t rely much on his efforts of working on multiple jobs.
One key factor to consider is the ability of an employee to maximize his earning potential not by just relying on this regular paychecks received from his work but also on his ability to allot a part of his earnings in investing and generating passive income from them.
One person, an ordinary employee, say working as an applications developer in a globally known software company. He continuously gets the big projects and eventually rises up the corporate ladder in his company. As he gets promoted, so does his salary and the perks that go along with it. Eventually, as his income increases, so does his lifestyle. He just moved into a bigger apartment, continuously upgrades his PC notebook at home, buys new gadgets and other things that will raise his standard of living. The story ends though on how he gets the money that supports his standard of living. It’s from his income earned from his work as an applications developer. This is also called earned income.
While any person can expect and wish for an increasing trend in his standard of living, his paycheck will usually remain constant for awhile unless he gets promoted or lands on a new job with a better pay compared to his previous one. This is the catchy part of making a living and aiming for higher standard of living.
To say that a person is now able to sustain his aimed standard of living, he should be able to divert some of his earned income from his paycheck to work for him. When a portion of his earned income is able to earn passive income, the cycle now goes on and on. Passive income can be defined as income that goes to you which is earned not thru your work within your 8 hour shift but
The question now is how to go beyond the regular paycheck and make some portions of the paycheck work to earn profits for yourself?
The key lies with knowing how to make the earned savings earn in the way of profits. Once a person is now making his money work to make more money, he’s now in the process creating profits beyond what his paycheck could deliver. This is now what we call passive income. When a person is earning money thru his current savings and investment placements and these sources of income are now able to sustain his current lifestyle or even upgrade to higher standard of living, he is now technically creating wealth for himself.
There are various ways for anybody to make his money work for him. Common ways of doing this is investing in real estate that appreciates in value, running a business, or by creating investing various financial instruments such as shares of stocks, mutual funds and government or corporate bonds.
A person with more time can probably run a small business by capitalizing on his earned savings or by partially seeking the help of banks to fund his business by obtaining a loan. As his business gets more clients and expands, he will able to see the difference running a business provides to him than working for a regular paycheck. A business, even small in capitalization when run smoothly, will surely attract more business transactions and thus see itself to expanding. As compared to being dependent solely on a paycheck, running a business, once successful can provide financial independence and wealth creation in the long run.
A person with probably lesser time to monitor and run a business can probably opt first by buying assets that creates income for him. Buying a real-estate property that can be turned into a commercial center that will generate rental income for him is one way one can capitalize and build wealth on real-estate. Buying a real-estate property at an undervalued prize and seeing potentials on its value to appreciate in the long run is also a good way to capitalize on it. He can sell the real-estate property once it appreciates in value that the owner sees that it has reached its value potential.
The same is true with investment securities such as shares of stocks, government or corporate bonds, and mutual funds. The value of these assets once it appreciates provides a realizable income from the initial investment that the buyer shelled out when he bought them.
Whether it be thru owning and running a business, investing in assets that provide recurring income such as real-estate or by buying investment securities that appreciates in value, this should give a person willing to take the challenge towards financial independence as he expands his capacity to generate income for himself beyond his usual paycheck and probably retire from the employee-paycheck cycle and start on building his wealth.
Video related to property and creating wealth
Interview from Channel 9 program A Current Affair, showcasing Property Secrets incredible property wealth creating service.
Frequently question about property and creating wealth
Do you lean toward or strongly believe in A or B?Do you tend to lean more toward believing in A or B?
OPTION A:
Abortion
Euthanasia
Atheism
Homosexual Marriage
Legalize Drugs
Large centralized government
Government is responsible for taking care of others
Redistribute of income, wealth and property
America is the root of evil in the world
Christmas and Christianity should be banned
OPTION B:
Belief in God
Homosexual Marriage is not the same as marriage between a man and woman
Individuals are responsible for taking care of others
Legalizing drugs would be harmful to society
A smaller, more decentralized government based on constitutional protections is better
Capitalism is not perfect but it creates wealth, jobs and individuals are entitled to what they earn.
America has flaws, but is still the best country
Christmas should remain a traditional holiday and Christianity has religious freedom like any other religion.
Abortion is really the killing of a child/fetus in the womb
Euthanasia is also killing with a fancy name
Those of you who mentioned bias, please re-read the options. Also, this is not conservative vs. liberal. Its secular vs. traditional.
About Author
Daegan Smith -
About the Author:
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