Wealth Building Is A Team Sport

Having been around the wealth building game for nearly a decade, I’ve had a chance to learn a few things.   First, getting financially fit occurs in a few reliable stages.  Typically you pay off any debts.  Second you build up a cash nest egg and third, you start to acquire assets.  This happens more or less in a typical progression.  But what is less obvious is how to accelerate this process.

Here is a hint, wealth building is a team sport.  That is, you need to make friends and work with good advisers to maximize your wealth accumulation.

1) Large Assets Generally Transfer Through Relationships

Large assets can be real estate, commercial real estate, business interests, large public or private stock placements, or gold bullion, etc. The process of getting your hands on assets worth having is ultimately going to involve forming relationships with persons who have these goods to sell or who can help you buy them.

For example, you may want to recruit a good real estate agent or you might need a friendly mortgage broker, or you might want to strike up a relationship with a small business broker who can help turn you onto deals.

In any case you’ll want access to a good commercial banker.  Like or not commercial banks have access to large amounts of capital and you might need this if you’re serious about seizing opportunities you can scale.

2) You’ll Need To Get Involved in Business

This seems a bit controversial, but if you look at wealth in America, you’ll immediately see that only a very small number of fortunes have been made exclusively through saving or from low probability events like winning the lottery or legally seizing someone else’s wealth (through the courts or through war).

Most – from the small ones to the really large ones – have been developed by starting or running a successful businesses.  This is the case for successful business people who start their own companies – but its also true for saver-investors who are in the stock market.  The stock market is in effect a derivative way to profit from the management and running of successful businesses.

In the event that you choose to become rich, you’ll need to ultimately find someone to help you manage, promote, or work in your enterprise.  The reason for this it that there are only so many hours in the day and you’ll eventually run into limits on your own knowledge and ability to exert effort.  This problem will become even more acute as your business grows.

3) As You Get Richer, You’ll Need Help Accounting For Everything

The more wealth you have, the more you’ll need someone to help you deal with all of it.  For example, the more income you have the more you will need someone to help you with income taxes.  Generally speaking as your income improves, your tax situation becomes more complex.  In addition, the IRS and US Congress typically change tax regulations every year.  So, hiring professional tax help can mean the difference between paying thousands per year in income taxes or not.

4) People You Need On Your Team:

Tax Accountant – As your wealth gets more complicated record keeping and accounting becomes more important in determining return.  Accounting is especially important if you own real estate or a complex business. Part of the benefits of owning rental property is the ability to take a deduction on the expenses incurred in running the property.  However, this deduction can get phased out on your Federal return if your income exceeds a certain threshold, thus reducing the real return on your investment.  So, in order to make the best decisions regarding capital allocation you’ll need to work with a tax professional.

Real Estate Agent – Most wealthy people own some kind of real estate.  You can’t really buy real estate without an agent.  Find someone who understands your needs, helps guide you to find the right place, doesn’t pressure you into something that doesn’t suit your needs, and negotiates on your behalf.  Most people only by real estate once or twice and therefore don’t think a lot about selecting an agent, but this is shortsighted.

Mortgage Lenders – Interest rates have a significant impact on your long term expenses and wealth building. And a good relationship with a mortgage lender can make it easier to buy property – they can advise you on what’s feasible when structuring deals.  Make sure to evaluate several lenders to compare rates and terms.  Lenders are like commercial bankers, they’re basically your access to capital, so you’ll want to appropriately nurture those relationships.

Contractors & Service Providers – Contractors and Service providers are key if you run any kind of business.  For example if you run a portfolio of rental properties you’d want someone good in home repairs or renovations.  Alternatively, if you have a consulting business you might need bookkeeping or marketing help.

Financial Advisor – Most financial advisors are insurance salespeople or have conflicts of interest which prevent them from adequately serving you.  However if you find a good fee-only financial advisor who’s focus is truly on maximizing your wealth, hire them.

Regardless of where you are in your own wealth building, consider being strategic in your approach to your relationships.  Try to find people who share your interests, who are very good at what they do, and are willing to work with you.  

Finally, remember this: there is no such thing as truly passive income.  Someone has to work for wealth to be created.  Many great economists have noted this.  Both Marx and Adam Smith said that value is determined partly by the amount of labor invested in a commodity.  So, it’s fair to say that without labor, there isn’t going to be a lot of wealth accumulation happening – regardless of the economic model you’re invested in.  So, the bottom line is that to get rich, paying a team to support you in the process is worth every penny.

More Great Articles From DinksFinance

Nine Ways To Make Extra Money

How Do You Handle A Spouse Who Doesn’t Contribute Financially?

-------------------------------------

By: James Hendrickson
Title: Wealth Building Is A Team Sport
Sourced From: www.dinksfinance.com/2024/03/wealth-building-is-a-team-sport/
Published Date: Fri, 15 Mar 2024 09:39:09 +0000

Read More