Get rish fast | What is Rich | How to become rich

The Formula For Riches is your passport to learn how to become rich?

The first thing you need to do is to define what you mean with "I want to get rich fast"

Most people will work for 40 to 45 years and will not be rich when they retire. What if you have to work for only 20 instead of 40, or what about 10 years instead of 40?

The good news is with the Formula For Riches it is possible for the average person to retire in less than five (5) years on condition they understand and follow the Formula For Riches.

The second thing you need to understand is that r

ich means different things to different people. You need to define what riches means to you.

Is it stated in actual figures? Or is it a vague idea or dream with images of luxury cars and homes, yachts and aeroplanes, jet-set travel, jewellery and celebrity parties?

Or is it a vision of having time to enjoy your family, watch your children grow up, and spend time making the world a better place?

There are three sure-fire ways to get rich fast, and to stay rich. The first is to learn to make money and the second way is to learn to invest money and the third way - and most effective way - is to learn how to do both.

By applying the Formula For Riches you will learn to invest money as well as to learn to make money in order to get rich fast.

What is wealth according to wealth creators?

They define as a life of abundance. Money is just one component of life, though a very important one.

Now is the time to begin to pin down what you mean by being rich in monetary terms. Let’s start with these definitions.

HOW RICH IS RICH?

My definition of financial independence:

When your passive income exceeds your expenses. So, for example, if your cost of living is $5,000 per month and you receive a passive income of over $5,000 per month, you are financially independent.

My definition of financial freedom:

When your passive income is double your expenses.

My definition of being well off:

When you are financially secure. This is the first level of riches and you have reached it when your income is at least three times your living expenses.

Remember that this sum must be indexed to inflation so that in years to come it has the same buying power.

That means it must grow at the same rate as the inflation rate.

My definition of being rich:

When your passive income is at least three times your standard of living and is indexed to inflation.

My definition of being super-rich:

When your passive income is at least 10 times more than your living expenses and this income is indexed to inflation over the entire anticipated length of your life.

You can go further – to the mega-rich level of Bill Gates, Warren Buffet and co. But I think this will do, just to start with, don’t you?!

To get rich fast you need to build passive residual income.

What is passive income and how do you receive it?

Passive income is income that you do not physically have to work for. It is your money working for you, not vice versa.

Traditional or mainstream ways to generate passive income include pension funds, dividends and interest on investments. This means that you have accumulated enough capital in an investment instrument to give you an income that sustains your standard of living.

Do these methods of generating passive income work?

These are the popular choices for passive income. But would you choose them if you knew that the chances of being financially secure - the first level of financial riches - are less than 5%?

Why is this?

The reason is simple, yet astonishing numbers of people are not aware of this fact:

It is far more difficult to build capital than income!

An illustration:
Goal:                                                        $8,000 income per month
Interest rate earned:                                   12% return
Capital amount needed to generate this:         $800,000

That’s not all, however! What about inflation?

What happens when you include the effects of inflation?

Assuming inflation rate is 6% a year:

Goal:
2004                                               $8,000
2005                $8,000 + 6% =           $8,480
2006                $8,480 + 6% =           $8,998.80
2007                $8998.80 + 6% =        $9,538.80

… and so on – as long as inflation stays at 6%!

What is inflation?

Inflation is the steady rise in prices every year. It’s the reason why a good salary ten years ago is a poor salary today. Inflation took off in the 1970s and caught an entire generation of employees by surprise. That generation was taught a set of values which is still being taught, though long out of date, namely:

“Save for your future”

“Get a good job and you’re looked after for life”.

(Sound familiar? If it’s so familiar you’ve never given it a thought … start thinking now! This way is not working anymore … if it ever did!)

As a result, this generation was the first to experience something almost unknown before: the pension or savings plan that is insufficient to live on.

Many people from that generation, though of retirement age, are forced to carry on working, depend on their children, or reduce their standard of living to a fraction of their former level.

We all know people like this. They’re our parents, grandparents, and maybe even ourselves.

They discovered that inflation has the power to steal our hard earned capital and income, without us even knowing it.

To cater for the phenomenon called inflation, we need more capital to sustain our standard of living than would be necessary if there were no inflation.

This is still only the beginning of the problem!

The sooner you want to reach the stage where your money works for you, so that you do not need to work for your money, the longer your money will have to last to keep you free. This is because of your life expectancy.

Let us call this stage retirement. At retirement, you will not be working for your money anymore because your money will be working for you.

How long can you expect to live?

Many people’s retirement plans are jeopardized by the fact that they live too long!

According to statistics, the average man who retires in South Africa at the age of 65 can expect to live for another 14 years.

This means that, when you reach the age of 65 the chances are 50% that you will live to the age of 79.

For 50% of all men this might be good news because it means they will be living longer than 14 years after retirement, but for the other 50% it is bad news because they are going to die in less than 14 years after retirement.

Now, before you get too excited because you are sure that you are going to be part of the 50% that is going to live longer than 14 years, there may be a financial downside to living too long!

Your money must live longer too!

The younger you are when you retire, the longer your retirement will be. This means your money must last longer, too!

Now let’s get back to the calculation:

Inflation rate:                                                                6%

$8,000 monthly income in 14 years’ time:                      $18,087.23

If you retire at the age of 45 and your life expectancy is another 34 years:

$8,000 monthly in 34 years’ time:                                  $58,008.20!

$58,000! It looks fantastic! It’s hard to stop thinking in today’s terms and see that in 34 years’ time it will be able to buy no more than $8,000 can buy you today.

This exercise teaches us just how powerful inflation is.

It teaches us how hard it is to see those financial projections in real terms.

And most importantly, it teaches us that we will need a lot more capital to become financially independent than most of us realize.

Especially if we plan to be financially independent.

What does tax do to the sums – and our plans?

We have to consider something else: the fact that normally, we take our living expenses out of our after-tax money.

What is after tax income?

We must make provision for income tax by adding the tax to my standard of living to determine what income we require in total - before tax. Assuming that the Receiver of Inland Revenue takes an average of 20% of our incomes:

Goal:                                                        $8,000 income per month

Tax:                                                         20%

Total income required before tax:                     $10,000

What effect will the combination of tax and inflation have on the capital amount you will need to generate $8,000 a month in today’s terms, after you retire?

If you need $10,000 (before tax);
you get no interest on my money;
there is no inflation;
you are 65 years of age;
and you want to retire …

… you must have $1,680,000 in cash so that you can withdraw $10,000 per month for the next 14 years.

If you want to retire at the age of 45, you must make provision for 34 years and you will therefore need $4,080,000.

If you take the inflation rate of 6% into consideration;

… make no provision for interest on your investment;

… you will need $2,521,808 at the age of 65;

… and R12,502,051 at the age of 45 …

… to sustain your standard of living!

Luckily, you can get some growth on your investment.

If you assume that you can get a tax-free return of 8% on your investment;

… you will only need $1,381,502 at the age of 65;

… and $2,822,080 at the age of 45 …

… to sustain the same standard of living.

You will need more if you retire at 45 than 65 because you are going to be around a lot longer.

What if you want to be financially secure? (Well off - first level of riches)

My children asked this question some time ago and I said to them:

“I consider myself rich if I can do what I want to, when I want to, with whom I want to.”

To me, freedom means:

I work only if I want to, where I want to and with whom I want to;

I know that I do not have to work at anything specifically in order to thrive;

I know that I can lose everything and that I will be wiser when I start again;

I can achieve every thing I want to without damaging myself, my relationship with my family, the environment, or anything else;

I have the freedom to live and work wherever I choose;

I have the ability to increase my income at will;

I can go on holiday whenever I want to and for as long as I want to;

I can live without worrying whether there will be enough money next month or next year.

How can one achieve the freedom of being financially secure?

There’s only one way: Learn how to apply the

Formula For Riches

by learning how to make and invest money.

Saving, working harder, and all the stories we are led to believe are simply not true.

The truth, and the only truth, is: the better we apply the

Formula For Riches

, the richer our lives will be.

The combination of managing your time and money according to the

Formula For Riches

, produces breathtaking results. It is really the only way to get rich fast.

It explains why many average people have been able to achieve total financial freedom in less than ten years … and some have done it in less than five years.

I will show you through this experiment - the mentorship programme - that it is possible to do it in far less than 3 years!

To be successful, you will need to be patient, and learn to apply the

Formula For Riches

http://www.secretsofsuccess.com/

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The Formula For Riches is your passport to learn how to become rich?