The Real Way to Wealth

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I suppose it is quite natural for some people to think that building wealth involves exciting moves on a regular basis. They think that building wealth involves heart pounding moments – buying and selling stocks, properties and wheeling and dealing – every other week. Buy stocks on Monday, sell a property on Tuesday, meet your lawyers on Wednesday, take over a company on Thursday, discuss the latest sukuk offer with your investment adviser on Friday and then play golf with the Finance Minister on Saturday. Just like in the movies, and the only thing missing is the background music.

I hate to disappoint them but the truth is very different from the picture they have in their minds.

The truth is that building wealth, for the most part, involves very little excitement as we know it. Although it obviously involves some wheeling and dealing (this applies particularly to entrepreneurs), it is about saving and investing on a regular basis for the most part. It is about managing your personal finance – planning your cashflow, saving your money and tracking your expenses – in the quietness of the night. In short, it is about the almost boring and almost mechanical way of saving a part of your income on a regular basis, and then investing that money into solid instruments that will enable you to meet your objectives. However, this does not mean that you are investing every week or into every investment that comes in your way. In fact, it is often the reverse. You choose three or four instruments (after doing your homework), and then deposit money regularly into those instruments. While you will obviously keep your eyes and ears open, you are basically ignoring most ‘opportunities’ (you know that most of them are lesser than your chosen instruments). At the same time, you continue educating yourself about money matters by reading books on it so you will get even better.

As you can see, these can hardly qualify as earth shattering moves. There are no heart pounding moments, car chases, bad guys in dark sunglasses or music in the background. There will be no volcanic eruptions, no shooting stars in the sky and no media coverage. And in fact, there will be no one clapping or applauding your moves. So if you don't tell, no one will ever know of your moves. Actually, the truth is that no one cares!

Next; unless you happen to be an entrepreneur running a wildly successful business that rakes in money by the truckloads, I can tell you that the progress will be slow in the beginning days. The saving is okay but the growth is terribly slow. In fact, it can be so slow that you are often left wondering, “Am I doing the right thing? Where are all the promised riches since I'm doing all the right things? Where are all the gold because I am managing my money right?”

The truth is that wealth, like everything else of value, will not appear tomorrow because you saved some money today. It is not that simple. Wealth is a fickle mistress: it demands intelligence, action, discipline, hunger, and yes, faith before it will show itself. In other words, you have to prove yourself worthy – by doing the right things – before wealth comes to your way.

So again, building wealth is about regular saving, intelligent investing and continuous education.

I have to add a corollary here. There are a few people – some of them are friends of mine – who had taken great risks (by borrowing lots and lots of money), and became fabulously wealthy in a relatively short time. But I will also add that for each one that made it big by borrowing tons of money, a thousand others fell away by the sides, and paid heavy prices in the process.

This being the case, I would suggest you to adopt the saving and investing method. While it may be slow, mechanical and even boring, but it is the surest way to wealth.

And when it comes, wealth is better than all the car chases, bad guys in dark sunglasses and music in the background put together.

Copyright © Azizi Ali 2010

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