Founder’s Note: I’m so excited to bring you this note from Mark Ford… the newest (and perhaps most iconic) member of our team. In my mind, it is the perfect essay for Manward. It reveals the truth about how to get rich – the truth nobody else wants to talk about. Enjoy it… and let me know your thoughts.
I’ve been writing about creating wealth for a dozen years. Before then, I wasn’t writing about it. I was doing it.
My income has actually increased since I stopped actively “creating wealth.” But that’s the thing about getting rich – when you get rich it is just too damn easy to get richer.
It’s not fair, but it’s a fact.
When I decided to get rich, I didn’t know the first thing about the subject. I was an editor. I wanted to be a novelist. I had never taken a course in finance or economics. Plus, I was broke.
But I had a great advantage. I was working for a human wealth machine – a man who, at 43, had already created three hugely profitable businesses. He decided to adopt me as his surrogate son and taught me everything he knew.
I retired 12 years later with a net worth well in excess of $10 million.
Two years later I went to work as a business consultant to Agora. Bill Bonner, Agora’s founder, adopted me as his kid brother. He also taught me everything he knew. In the 15 years that have passed since then, my wealth has multiplied many times over.
Starting at age 50, I wrote about entrepreneurship (under my pen name Michael Masterson) for 10 years. I wrote about close to a dozen books and several thousand essays. I adopted my readers as my surrogate siblings. I told them everything I knew about starting businesses.
Then, at 60, I retired the Michael Masterson pen name. Since then I’ve attempted to tell my readers everything I know about creating wealth – which is a bigger and more complicated subject than entrepreneurship.
Today, I want to briefly introduce you to six basic truths about wealth building that have made me successful.
Some of the secrets you won’t learn anywhere else. I haven’t seen them written in the mainstream financial press. And many of them were learned the hard way – by me.
First, let’s begin with some of the lies about creating wealth. At one time or another in my wealth-building career, I foolishly believed in the following so called “facts”:
- Wealthy people are stingy for a reason. The secret to becoming wealthy is to scrimp and save.
- The stock market is the most efficient way to invest. You can’t become wealthy unless you understand and master the stock market.
- Geopolitics determines investment outcomes. You can’t become wealthy unless you understand politics and economics.
- The general public is always wrong about economic and financial trends. The fastest way to acquire wealth is to invest as a contrarian – i.e., against market sentiment.
- Economics is governed by the inverse relationship between risk and reward. If you are not willing to take big risk, you will never enjoy big profits.
Do any of these “truths” sound familiar? Have you been following any gurus that advocate these “facts”?
If so, pay attention. I’m not the only person in the world that went from broke to rich. There are many, many people that have done so and some of these people have written books about it.
I don’t read all the popular books on wealth building because I feel comfortable with the system I’ve developed myself, through my own experience. I don’t follow the advice of others except when it dovetails with my own experience.
But that’s not to say that my system is the only system that works. Nor do I want to argue that it is the right system for you. All I can do is report my own experiences to you as honestly as I possibly can.
You are my surrogate siblings. I want you to succeed. The only way I can help you is to tell you what I know to be true. And this is what I know – from my own experience – to be true about creating wealth:
You’ll never get rich unless you understand some fundamentals about saving, spending and investing.
The single most important factor in avoiding the spending spiral that kills wealth is to stay in the house you have now. Nobody else that I know of has made this simple point. But I can tell you that it is true.
Stock investing (or even stock and bond investing) are inadequate strategies for building wealth. They won’t get you rich or make you wealthy however much you wish they would.
Even Warren Buffett, the world’s most successful investor, knows this. His wealth has come not from being an individual investor but from being the principal of Berkshire Hathaway – a business. Keep that thought in mind every time you hear his name quoted.
The most important single factor in wealth building is the size of your investible income. Investible income is what you have left over each month after you’ve taken care of your lifestyle expenses.
Again, nobody else I ever read had the courage to say this before I did. (Now I see one of my protégés saying this and of course I am flattered to hear him pretending it is his own idea.)
Actually, that’s the second most important factor in building wealth. The No. 1 strategy is acquiring equity in a startup business. There are many ways to do this. The most commonly talked-about ways are downright foolish. But there are smart ways to do this even if you are a novice to business.
Investing in rental real estate is unique – it stands halfway between active income and passive income. Next to entrepreneurship, it provides the highest return you can get from any financial endeavor.
The biggest mistake retirees make is giving up their active income. I know that this is exactly what you hope to do some day. But I’m warning you. It’s a big mistake.
If you are already retired, you are probably hoping you can replace that income with passive investment strategies. I’m here to tell you that they won’t do.
To keep your wealth for a lifetime you need multiple streams of passive income. Your goal should be to build each stream of income to a level that you can live on that and that alone.
In the coming weeks, I’m going to continue sharing my wealth-building secrets with you. I’ve been so fortunate to have had mentors who have helped me, and I hope my success will inspire and motivate you to take steps to building your own wealth and living rich.