How To Use Gold To Build Real Wealth
I want to talk to you about using gold to build real wealth. Very few people end up rich and wealthy when they retire. That's because most people make two really big blunders that they never recover from. For you that means if you want to build real wealth you have to what most people don't do. You gotta be a bit of a contrarian and go against the masses.
The first thing people do is nothing. They don't even make an action plan to build real wealth. They seem to think that things will just take care of themselves. Or else they think that they can just put off planning for later. Actually a plan isn't what you want - you want action!
The typical person starts out in their twenties thinking that to end up rich what they need to do is go to school, get a job that will get them a good income, start a family, get approved for a mortgage that will get them a house that they will eventually pay off and own, and then they will start to save to retire. They think all they have to do is these things in this order and they will live the American dream. But it's not a real plan. It's just a way of saying I will one day have some wealth once I pay my debts off and then I will try to save.
What happens is that most people just pile on more and more debt. They don't save. They might increase their income over time thanks to job advancement, but any increase in income they get splurge. So they don't use it to build wealth. They just pay off their debts, and most actually go even deeper into debt with credit cards and a second mortgage on a vacation property.
They convince themselves that they are doing the right thing, because they are doing what everyone else they know is doing. They were trained to think they needed to go to college and get a degree so that they could get the approval of corporate America to be worthy of a white-collar job.
But they don't end up with wealth. They end up working for their debt masters and their corporate pay masters for much longer than they want to. Statistics show that in the United States only 15% of Americans make contributions to an IRA plan and the average American who does succeed in retiring do so with an IRA has that $148,000 in their retirement account. That's pathetic.
The big mistakes most people make are mental. They aren't ones of resources - they are ones of thinking. The people who really become wealthy and rich do so by working towards that goal their whole life. They don't put it off till after they get a job and pay their mortgages and so forth. They start right from the beginning. When they start working they put some of their income to use to build wealth. They begin to build some wealth before they take a step into a bank and go in debt with a mortgage.
Success is messy. You become wealthy by doing a lot of stuff at once. Take some of the income you make and put it to use building wealth. It is never too late to start.
The second mental wealth building road block that prevents people from becoming wealthy is a simple misunderstanding of what wealth really is. They are right in thinking that once you have a lot of wealth you can have the freedom to do just about anything you want to do and live with a lot fewer worries than most people have, but they are wrong in thinking what wealth really is.
People think wealth is money. They think having a lot of cash or a lot of money deposited in the bank makes you wealthy. But that isn't real wealth. Having real wealth consists of owning assets that can go up in value and generate even more wealth for you as time goes on.
Over time all currencies actually lose value. A U.S. dollar bill in 1950 is now worth $9.53. That means inflation has eaten away 852.7% of the value of the US dollar since 1950 and with the Fed money printing operations today the value of the dollar is likely to fall even faster in the years to come.
Someone retired today who thought building wealth meant simply putting money under their mattress would have had a hard time even keeping up with inflation during their working years. As they built their cash stash their cash would have lost value. Twenty-years ago parents used to teach their kids to put pennies, dimes, and quarters, into a piggy bank. Now these coins add up to so little that it isn't even worth the trouble. As a result kids are no longer taught to save their change while most toy stores no longer even sell piggy banks anymore.
The point is that paper money IS NOT wealth. People with little money dream of one day being a millionaire. But having a million dollars isn't real wealth. That's why most people who hit the lottery end up broke a few years later. Instead of using their winnings to buy real assets they just blow it.
People think more money is the solution to their problems, but having more money in itself does nothing for most people, because as people's incomes grow they usually just go deeper into debt.
To build wealth you have to take cash you get and transform that money into wealth building assets. You see money is not wealth. Having wealth consists of owning assets that will either increase in value for you overtime or generate extra money for you that you can use however you want to - even to build even more wealth.
A wealthy person is someone who owns a portfolio of wealth building assets. Anyone can get to that point. All you need to do is make purchases in the right assets. Even if they are small purchases if they are the right assets you can still end up wealthy if those assets go up in value enough for you. It's not the income you have that matters or even the money you have, but that you use what extra cash resources you can get your hands on and how you use it that matters. You don't need to be a genius to do smart stuff.
I'm wealthy because over the past twenty-years I have used income and capital gains to purchase all sorts of different assets. I have bought a house, land, lots of stocks, different investment funds, and even helped finance various business ventures that I own an ownership interest in and get an income from. But out of everything I have bought the best single investment I made in terms of percentage return was in a bar of gold in 2002 for around $300 an ounce. At this moment it has gone up over 500% and I expect it to go up even more in the years to come. My house that I bought around the same time is barely worth much more than what I paid for it. There is a reason that gold has always been the instrument of kings.
Let's think about real wealth for a second. Wealth consists of assets. There are two mains types of assets - you have hard assets and soft assets. The latter are paper assets like stocks, bonds, loans, CD's, and yes pure cash, which is at the bottom of the barrel. Ideally what you want to have is a mix of assets in your overall wealth portfolio that consists of various paper and hard assets.
Ok if you are thinking hard assets are physical things than you right. Hard assets include real estate, land, and things that come out of the ground like oil, gold, and silver. Buying precious metals, like gold coins and gold bullion, is the simplest way to own hard assets.
The neat thing about hard assets is that they tend to rise in value in times of inflation and financial turmoil when stocks don't do so well. During the 1970's while the economy went through stagnation and the stock market went nowhere oil prices rose in value and the price of gold skyrocketed. In the past ten years commodities as a whole have once again risen in value while the stock market has gone through a debt stagnation mess. This trend is about to enter a quickening phase.
That's one reason why right now owning some hard assets such as gold bullion should be a critical component of any serious wealth builder's portfolio. I consider my hard assets my own personal fortress. It's why even though I have made a career out of the stock market I have been telling people to just forget about investing in the US stock market right now and focus on gold by buying physical gold bullion and if they want to speculate more some commodity stocks. The people getting involved in the precious metals bull market right now and protecting themselves from the inflation trend will prove to be the smartest wealth builders in the years to come.
You see diversification is a key to wealth building. When some assets do bad other assets tend to do well. Someone invested only in the US stock market in 2008 got annihilated during the 2008 financial collapse, but during that year gold went up and has risen over 80% since then with more gains to come.
To build wealth properly requires diversification and knowing the right time to concentrate on one asset class instead of another. Stocks were great in the 1980's and 1990's and now gold is king. In my book Strategic Stock Trading available at Amazon.com I explain the techniques I have used to find stocks and know when to buy them over the years. I show people what I'm doing in the stock market world at my site wallstreetwindow.com.
One key component of successful investment decision making is to be willing to go against the crowd. You want to buy stocks when they have dropped so much that they have gotten cheap. At such times though the masses have often sold out in disgust over the fact that stocks have dropped! They tend to buy high and sell low.
The vast majority of people will never build real wealth so you have to do what they won't do. When it comes to gold right now very few people are getting into the gold market. Most people don't do anything to build real wealth and out of all of those that do only the elite of them even get involved in precious metals. It's rare that a broker or investment adviser will tell a client about them, because they have nothing to gain from doing so - in fact if the client sells out of a stock account to buy physical gold their investment advisers will lose out on fees! So wall street types tend to try to scare people when it comes to gold.
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