Takes money to make money: The Formula for getting rich (the one that works)
The Formula for getting rich is NOT about compound interest, internet business, multi-level marketing, FOREX trading, stock options, real estate, mutual funds or starting a business. Getting rich through saving and “the magic of compound interest” would take ages. Internet business is not for everyone. MLM (multi-level marketing) is a scam. FOREX trading is more about chance than about skill. Real estate requires a huge up-fron investment. And starting a business has less than 5% success rate.
Yet there are rich people in all those fields. There are real estate millionaires and guys who made fortunes off FOREX. But you can’t wrap your head around how they made it, exactly. Did someone help them? Or was it just the plain old “hard work and a little luck?”
Well, the truth is, it doesn’t matter which path you choose. All that matters is how prepared you are when you set foot on your path of choice. So actually, it doesn’t really matter whether you choose real estate or business or FOREX trading. All that matters is how you’ve lined up your pawns.
Here’s what I mean.
The Formula for Getting rich, stage 1: you need money
No matter what they tell you, you need money to make money. If you invest pennies, you get pennies in return. You invest dollars and you get dollars in return. If you want to make thousands, you have to invest thousands first.
(Okay, sometimes you strike a great deal where you invest pennies but end up making thousands. Like when you invest a dollar to buy a lottery ticket and make a million by hitting the jackpot. That’s pure luck. Or when you invest pennies in hosting and start a blog and it goes huge… that’s also luck. So don’t take Facebook and Google as the rule because they really are exceptions, and I think that back at the time when he was coding Facebook, Mark Zucherberg didn’t expect it to turn into the huge hit that it is.)
Accumulating enough money is the hardest part of The Formula for Getting Rich, because it takes the most time. Maybe several years, or – depending on the hand life deals you – maybe a decade.
But how much money is “enough” to get you started on The Formula for getting rich?
Well, the higher your definition of “rich,” the more money you’ll need to get things rolling. Can you start by investing $2000 and make $50 000 off of it? Hmmm I doubt it. But what if you start by investing $200 000, turn that into $250 000 and clear a profit of $50 000? Much more likely.
However, most people don’t have 200k, which is why most people can’t get to earnings in the scale of 250k and clear 50k in profit. Most of us just operate in the scale of $200 (two hundred bucks) and so whatever we earn on the side is in the scale of $250 in earning or $50 in profit.
That’s why they say It takes money to make money. And if you don’t have it, you need to start working on it.
Some will say that not having money is not really a problem. You can always get a loan, right? But the catch is, if your investment fails and you can’t pay back the loan, you’ll be in trouble. I think there are plenty of horror stories with that script.
Besides, saving up is better than borrowing because when you save, you have interest working in your favor; and the more you save, the more you earn in interest. But borrowing is exactly the opposite – interest works against you; and the more you borrow, the more you get penalized in interest.
There is, however, one drawback to saving: it takes a lot of time. And sometimes, you don’t have a lot of time – sometimes an opportunity presents itself only for a short window of time and it won’t sit around and wait for you. So obviously, it would make sense to go in debt to seize the chance, right? WRONG! What would make sense is that you start saving in advance so that you always have a pile of cash ready whenever a money-making opportunity presents itself. (That’s how the Jews do it.)
And does saving money really have to take a long time?
Well, how much you can save depends on how much you can earn. If you work for minimum wage, saving up 20k will probably take you decades. But if you work for 120k a year, you could have those 20k in just a few months.
Suppose you’re minimum wage and you’ve worked 2 years to save up 5k. Suppose you invest that money into something and it fails… bam, you’ve just lost yourself 2 years of your life. That hurts. And it’s scary, right? That’s why so many poor people are afraid to even try and start a side gig or make an investment. It’s just too big for them.
But suppose you make 120k a year and you save up 5k in just two months. Suppose you invest that money and you fail miserably… well, big deal! You’ll have that money again in just two months.
That is why increasing your current income is vital for getting rich. But how do you increase your current income? Well, the most obvious answer is: through your job. That’s the safest and easiest route. (Which is made even easier if you can negotiate a higher starting salary as early as the interview stage.) Other options for increasing your current income are getting a second job or starting a side gig (freelance writing, repairing cars on the weekend or buying in bulk to later mark up and re-sell… you pick).
But beware: increasing your income will only make a difference if you increase your savings along the way. After all, it’s not about how much you earn; it’s only how much you can retain that matters. It’s better to earn 5k/month and save 1k than to earn 12k/month and spend it all away.
The Formula for Getting rich, stage 2: you need friends
Always, always be looking to make more friends. Be open to meeting lots of people. Befriend those whom you like and build a respectable relationship with those who are powerful and whom you respect.
Don’t wait to start doing this until you have money and need contacts. Just like saving, you need to start early so that when the moment comes, you already have the friend or contact you need.
Don’t filter or judge people by their current job, nor by how much money they make now. No one knows where they’ll be in ten years.
My aunt works as a housekeeper. She’s not rich, influential or even educated. But she has the biggest heart in the world and is always trying to help someone. She’s not powerful herself but she knows some powerful people with lots of money – she’s in their homes, she babysits their children. If my aunt was your friend and if you asked her if she knows someone looking for English lessons, she could put you in touch with the rich guys who need tutors for their children but who don’t want just a random stranger in their home, even if that stranger is the best English teacher. They want someone they can trust. And if my aunt would mention your name to them, you could easily land a side gig that makes you more money than the average going rate. Not only that, but you’ll also get your foot through the door for access to a circle of rich, powerful people.
See what I mean?
Friends are also very valuable because there are things – favors – you can’t buy with money. Some things are only available to you through someone’s good will. That’s when friends come in.
Finally, by trying your best to make a good impression and do good things for so many people, you will inevitably build yourself a great reputation. You reputation will preceed you and help you in such unexpected ways you can’t even imagine yet. But trust me, it will.
Getting rich, stage 3: finally start making money
Now that you have lots of cash available (through Step 1 of the Formula) and you have lots of friends available (through Step 2 of the Formula), you’re… a person of power.
All you have to do from here on is to choose how you want to make money – are you passionate about real estate? Or maybe you’ve dreamed about a charming coffee-shop in the heart of the town? You can choose actively or wait out for destiny to giv e you a sign.
But in any case… the road before you is clear now.