How To Build Wealth - A Letter From A Father

You don't have to be smart in order to have money. You don't have to be lucky either.

The way to have money is actually very simple. The problem is that most people refuse to do what is required. It is not that they are unable; it's that they are unwilling.

This is the whole issue: Are you willing to do the simple things that are required? You don't have to be smart; you only have to do a few simple things.

Does having money matter enough to you? I won't bother telling you how much easier life is with extra money. You must know that by now. The question is this: Will you do what it takes to get it and keep it? Almost everyone wants money, but a only very small number are willing to do what it takes to get it. Decide now if you do or don't want it. I'm about to explain exactly how to have money. It's amazingly simple. The question is, will you do it?

STEP ONE: PAY YOURSELF

Want to know the great secret? Here it is: No matter how much or how little you make, you have to keep at least a tenth for yourself.

That's it.

But notice, I said you have to keep it. That means you don't spend it; not for rent, not for food, not for anything. You have to keep it.

The flip-side of this is that you have to control your spending. Do it! Don't be like a dog, who will eat everything placed before him, even if it makes him puke. You have to save the money. If not, forget having money and start trying to sponge off of others. (Yes, I know you're not like that, but this point deserves harsh language.)

Think you're going to find an easier way? Forget it - guys have been trying that for thousands of years, and have remained poor. The world is littered with people who though there had to be an easier way. There isn't. Cut your damn expenses and hide the money away. This is your only choice: Do it, or don't. Have money, or don't.

Let your friends make fun of you when you say you're not going to the bar. Don't buy the hot car. Don't borrow money! Stop trying to impress people with things - impress them with yourself. (This is harder, but it endures.)

Here is your choice: How badly do you want money? If you want it, you'll have to cut your spending. If you can't bring yourself to do that, the game is over and you lose. It's that simple.

STEP TWO: PUT YOUR MONEY TO WORK

Okay, once you have a few dollars stashed away, you need to put them to work. Get this picture into your head: People work, but so can money. Every gram of gold you own can be put to work, producing more grams of gold. That's the genius of all this. All those little grams of gold become your servants, making more grams of gold. Once you own them, you can put them to work, and keep them working for the rest of your life.

You put your money to work by placing it into good investments. Now, this is important: Never follow the crowd. The crowd is brain-dead. Put your money into safe investments that you understand.

If an investment is too complicated to understand, walk away. A good investment should be understandable to a high school kid. Actually, if you can't make an intelligent teenager understand how an investment is going to make money, forget it.

Forget complicated and unrealistic investments. Stick with simple and reasonable. No one is really going to pay you 36% a year for use of your money; you'll lose it. The guy is a scam artist, or maybe just silly. Either way, you lose. On the other hand, if you help a small dry cleaner get started, you might get money back (and free dry cleaning) for many years.

Look for safe, sensible investments. Forget the fancy crap.

STEP THREE: BUY ASSETS ONLY

Buy things that generate money. It's all about money in or money out. All the rest is fancy talk, and sometimes bullshit.

If something results in money in, it is called an asset. If it results in money out, it's called a liability. Buy assets.

Your house is not an asset. Owning it results in money out every month. Cars and computers are "money out" items. Some of these things may be necessary, but they are not your investments, they are your expenses. Be clear about the difference.

Do not spend your saved money on liabilities. The money you save must be used to collect assets. Only assets.

Separate your living expenses from your investments. Your 10% (or more!) goes only for things that bring more money in - not for houses, computers, and cars. Don't confuse the two. Buy assets.

THAT'S IT!!

Was that hard? If you do the things mentioned above, you will have money. That's all you have to know, and that's all you have to do. Yeah, getting money is really that simple. You just have to do it, persistently, over time.

NOW THAT YOU HAVE MONEY...

All right, let's presume that you've already done what is written above. Now what? Well, you're about to find out that wherever money is to be seen, there will thieves be gathered. Yeah, that means that if people know you have money, they're going to try to get some of it. That sucks, but that's the truth. Sorry.

PRIVACY

OK, my newly "rich" friend, you are about to face some reality. I'm going to tell you the truth. Like it or not, this is what people with money have to face. Let's begin at the beginning.

Envy is the greatest threat to money that has ever existed on this planet. It will not only get your money stolen from you, but it will prevent you from collecting money in the first place. And envy comes not only from outsiders, but it is generally most harmful inside of families, clans, and cultures. And remember, they will never speak the word "envy." Instead, they'll speak of "obligation." Bullshit - the real issue is envy.

Get this into your head: Aside from your children, and maybe your parents, you don't owe anyone anything, except to do them no harm. Be clear on this! You don't owe your neighborhood, your community, your religion, or anyone or anything else. They will not be responsible for you getting money. If they were responsible, then everyone in your "community" would already be rich!

What you have or don't have is no one's business. Their only legitimate concern is that you should not harm anyone. And that's all. A "debt to society" is a scam. "Giving back to the community" is a scam. Some guy, somewhere, is waiting to collect your "sacrifices." Don't be intimidated by these elegant thieves.

Don't ever ask someone to carry you through life, and don't you ever agree to carry others. Do you think you are helping them? You are not; you are helping them to live as a parasite.

You should help people who suffer through no fault of their own: The blind, the aged, the crippled; the victims of cruel chance.

When the time comes to help someone who really needs it, then by all means do so, but never think you owe it to the person. You do not owe. At that moment, you will help someone out of the goodness of your own heart. And you will only have enough ability to help this person if you already have some money.

So, as you start having money, don't tell people! It's not their business anyway. The Chinese have an old proverb: A rich man keeps a poor door. Don't tell people how much money you have. Don't spend wildly. Don't show off. If you do, you are just asking people to start coming after your money.

THE SERIOUS THREATS

Now, let's get very clear on something: The biggest monetary threats in the world are governments. I don't care what you were taught in school, or how many people would gasp at the idea, or how dangerous this sounds. You are going to have to face reality on this: If you have money, your local government will demand you give half of it to them. And if you do not comply, they will take it right out of your bank account. And if you try to move it around to stop them, they will put you into a jail.

I'm going to pass-up discussions of paying for government services, after saying this: You should never accept something for nothing. So, if you drive on roads that other people build, use firemen others pay for, and so on, you should pay. BUT, that doesn't mean the others have a right to take money from you by force, and in whatever amounts they wish. Things voluntary are moral; things involuntary are immoral. I'll leave you to figure out the rest.

Patriotism is misleading. Nationalism is from hell. Government in an exercise in managed crime, and you have the right to protect yourself. Every rich person knows this, though they can't say it in public.

Why do you think rich guys always buy-off politicians? They're trying to protect themselves! They're not interested in stealing a hundred bucks from some poor guy - they just don't want to get several million stolen from their bank accounts! So, they buy a few politicians and hire great tax lawyers. You'd do the same thing if you were in their positions, and you would be justified!

Taxation is usually the single greatest threat to your wealth. You have to avoid it wherever possible. No, you don't want to get into a position where you can be tossed into a jail, but you do want to avoid their takings.

Once you have some money, you'll have to look into trusts, corporations, and, perhaps, obtaining residency in a tax haven. (All smart rich guys do this, but they never talk about it.) If you don't do something, the local government will take half your money or more. Don't let them.

YOU ARE THE DEEP POCKET

The legal systems of the world are screwed-up. I won't go into details, but suffice it to say that if you have money, you can become a target for lawsuits.

The good news is that it is pretty easy to protect yourself. Once you have any real money, you have to set up a corporation, and do all your business trough the corporation. This will insulate you from crazy lawsuits. (Though nothing will help you if you do truly criminal or destructive things.)

Always do business through corporations and trusts. They are cheap, effective tools; use them.

Find a good accountant and pay him. Be aggressive, but legal.

DEVELOPING YOURSELF

Everything I've written so far calls upon you to do things. So, I am counting on your basic ability. This really isn't a problem, as any healthy human has awesome capabilities. But, putting those capabilities to use can sometimes be a problem. I'm going to give you a few paragraphs on this, and leave it to you to follow-up. You'll have to do this if you want to be successful, or even to be happy. Don't neglect it.

OK, first the basics: Philosophy and psychology rule your life. Whether you feel like this is true or not is irrelevant. It is true. Ask me, and I'll give you a list of the right books to read. How well you absorb them will greatly determine the satisfaction and happiness you experience in life. Tend to your own soul first; the rest will follow.

Now, on to motivation: Humans are teleological. That means that we become motivated by seeing goals. You have to develop a clear picture in your head of what the payoff looks like. What exactly will you get at the end of the line? Spend your time envisioning this. Daydream about it; look at it from every angle; feel it; know it. Motivation will grow from this. Once you can feel the prize in your hand, motivation will take care of itself.

Now, pay close attention:

You don't get what you want out of life; you get what you expect.
You don't get what you hope for; you get what you expect.
You don't get what you deserve; you get what you expect.

This is about as close to magic as anything you'll experience on earth. Sure, a nuclear bomb can derail this process, but barring such things, this is what tends to happen.

Pay attention to your deepest thoughts. What do you really expect?

If you find yourself expecting things that you don't really want, kill those thoughts immediately! This is the time to be violent with yourself. Root out low expectations. Command your mind to do it your way.

Then, start expecting the best things. Meditate on them. But don't hope and don't wish. See them in your hand. Spend time seeing them in your hands, in your life. Grow to expect them. If you do, you are very likely to get them.

Finally, three rules for changing your life, courtesy of William James:

Do it immediately.
Do it flamboyantly.
No exceptions!

With all my love,

Dad