Last week I shared how a wealth strategy can answer your investment questions.
But what happens if you are ready to get started on your wealth strategy and don’t have a lot of income to invest?
This question comes up often when I am speaking to those interested in developing a wealth strategy. They usually think they must wait until they have “enough” money to get started. They are always pleasantly surprised when I tell them that they can create and implement a wealth strategy without any income at all.
Your Capital
Successful wealth strategies focus first on accumulating capital. Simply put, capital is the amount you OWN less the amount you OWE. Another term for capital is net worth.
Most people realize that it takes capital to make capital. But what if you don’t have much in the way of capital to begin with? How do you accumulate capital?
Types of Capital
It’s often forgotten that there are different types of capital. The capital we normally think about is financial capital. But there are two other types of capital that are at least as important as financial capital – time capital and intellectual capital.
Financial Capital
Financial capital is the type of capital most people think of when it comes to investing. This is includes all of our cash, stocks, real estate and other assets.
Financial capital can usually be leveraged fairly easily, which can help accumulate capital even if starting with a small amount of capital. The most common form of financial capital leverage is a mortgage. If you buy a $150,000 property, you could pay $150,000 in cash, or you could get a $120,000 mortgage and only come out of pocket $30,000.
Time Capital
Time capital, though often overlooked, is pretty easy to understand. It’s the amount of time we can devote to our wealth strategy.
Time capital is the type of capital that is most severely limited. We each have only 24 hours in a day.
So how can you accumulate time capital with this limitation? The answer is leverage.
Just like financial capital, we can leverage our time capital. How? A wealth team. A wealth team is a group of advisors, coaches, mentors, employees, vendors and other contacts that assist you in building your wealth. Identifying the right members for your wealth team can result in the rapid accumulation of time capital.
Intellectual Capital
The one type of capital that is frequently overlooked but which is truly unlimited is intellectual capital.
What exactly is intellectual capital? Think about all of those great ideas you have had over the years to improve your situation or create income. These are the result of your own intellectual capital.
The problem most people have is that they do not realize the extent of their own intellectual capital. Whether your wealth strategy includes starting a business, investing in real estate or investing in the stock market, your intellectual capital can add leverage and velocity to your wealth accumulation.
There are multiple ways to take advantage of your intellectual capital. You may have ideas that you can market through a book, website, or seminar. You may have ideas to improve the distribution of your product. You may figure out a new way to find a good real estate deal. Or, you may have an idea for a new financial product that you could market. This is all intellectual capital.
You don’t have to have financial capital to get started. Many of the wealthiest people in the world started with little or no financial capital (Bill Gates comes to mind). They used other types of capital to start building their fortunes. And so can you.
Tom Wheelwright –
About the Author:
Successful wealth strategies focus first on accumulating capital. Simply put, capital is the amount you OWN less the amount you OWE. Another term for capital is net worth. http://www.ProVisionWealth.com