Six Rules for creating wealth - Vusi Thembekwayo

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Vusi Thembekwayo 16 August 2019

The fallacy of wealth creation is that it is directly linked to hard work alone.

It’s so much more complex.

The first part of the system of wealth creation is to build a source of income not linked to your labour of physical effort.

This is different from passive income. 

You can actively invest yourself or your income into a form of income that doesn’t require your labour.

The second part is to increase your earning potential by developing yourself as a subject matter expert in your field.

Clients & employers both have a deep appreciation for a skill that is rare, specialized & developed a with nuance.

The third part is to take a long-term view. Wealth is created over TIME. Instant wealth is not wealth, it’s income.

Winning the lotto is “windfall income”. 

Making the winnings work for you & sweating that money is wealth creation.

Fourth, diversify across asset classes.

This is about diversifying across listeds (cash, equities, bonds, etc), & unlisted assets. I have been doing this deliberately over the past five years. I am heavily weighted on “unlisted” and the lock-ins are not great for risk management but my view is the premium earnings from those will yield in the over the next 12months.

This is the hardest part of the game because the language of investing is unnecessarily complex & often tautologous.

Fifth, live within your means. Income is not wealth. High income simply means you’re generating a high level of disposable income & are therefore creditworthy. I have made this mistake before.

I gave myself the challenge of investing a fixed percentage of my income. Try it.

Disclaimer: No nonsensical tweets about “how can I invest or save when I can barely afford my bills”.

We’ve all had to answer that question for ourselves at some point. I wasn’t born with money either. You’re a grown-up. Figure it out.

Sixth, there is no such thing a “quick money” or “fast money”. Fast money is either proceeds of a crime, unethically accrued or linked to a scheme of theft.

In a world of instant gratification, patience is currency.

Finally, invest for yourself.

It’s not about what people will think of you. 

It’s not about how your community or friends will perceive you. 

It’s not impressing others. 

It’s about you.

Like JayZ said, “too many of us living rich and dying broke”.

I hope this helps.

Watch this video on Wealth creation 101

Vusi Thembekwayo

Speaker | Investor | Leader