7 Steps To Begin Building Your Wealth

7 Steps To Begin Building Your Wealth

 

Is your money working for you, or are you still working for your money?

No matter what wealth level you’re on, or wherever you find latent cash from, you can put it to use positively and start to gain momentum in your wealth-building journey.  And the more momentum you gain, the easier it becomes to put money aside.

It doesn’t matter what age you are, it’s never a bad time to start or review building your wealth. Whether you’re at an early stage or you’re a little further down the line, you can start with these seven easy steps:

#1: Reduce or eliminate your debt

One of the easiest ways to reduce your financial obligations is to find what you can live without. For example, people buy insurance in all sorts of different places and they often get added on almost unnoticed. Whether it’s washing machine insurance, iPhone insurance, or pipe and drainage insurance, this is an area most can quite confidently eliminate. The secret then is to re-apply those savings towards building your assets.

One of our members not only managed to reduce his car renewal by about three hundred pounds annually, but is also now saving an extra hundred pounds a month just by going through and finding little things here and there that he was paying for which he no longer needs.

Listen to the podcast below to find out how to uncover hidden money in your life using D.E.B.I.T.S

 

#2: Build an emergency fund

This is a savings strategy with a very specific purpose. Getting an emergency fund is really important if you’re at the beginning of your journey so that if something unexpected occurs, like a big bill that comes through your door which you can’t eliminate, you won’t be wondering how to pay for it, and it won’t hamper your wealth-building drive.

We suggest having somewhere around three to six months worth of your normal expenses. And don’t worry too much about making that as a way of building wealth. Just use that sum of money as a cushion, something to fall back on so you feel like that’s locked in. Any extra money beyond that can be used to build wealth.

”Never let a month go by without taking some action to build your wealth”

Kevin Whelan

#3: Get life cover in place

If you’ve got debt or a young family with kids, it’s important to get your life cover in place. It’s usually only a few pounds a month and it will protect your loved ones by maintaining your income should anything happen to you either through illness or death. That can be a really valuable thing to do for future proofing.

#4: Improve your financial IQ

Wealth always begins with education.

If you have recognised the desire to build wealth now and you’re beginning to get a feeling for which assets are appropriate, then you could just simply start investing some of that money in yourself. Having the right education will equip you to create more wealth in the future. The more educated we are, the better decisions we make. At WealthBuilders, we are connected to many avenues of education worth exploring which we’d be delighted to share with you.

#5: Start making an investment

Wealth isn’t built on theory, but rather on action. To do this successfully, you need to be sure to understand the risk you’re taking.

A good place to start is with some form of index tracker fund because you’re investing in the market generally, rather than specific sections. Trackers are very, very low cost, particularly if you use Exchange Traded Funds (EFTs), and are very liquid, so you can withdraw your cash whenever you need to.

#6: Consider premium bonds

Think of premium bonds as the equivalent of playing the lottery, but if you don’t win, you get your money back anyway.

Premium bond access has come down from 100 pounds to 25 pounds. It’s not really a growth maker or wealth builder, but it’s a secure place to park emergency money. It’s underwritten by the government (we would call that “gilt-edged”), so your money’s safe. And of course, you’re participating in a prize draw where you can win a million pounds, so that would definitely be wealth building if you got a million quid in one go!

#7: Make extra money as an affiliate

One of the ways you can build wealth is to get the leverage of the relationship with somebody else whose values you share, whose products you recognize and appreciate, where you could make some money by being a referrer.

We call this an affiliate program. It’s such a common model now, and many people are using it without even realising sometimes. For example, you tell someone about Uber and share a link and boom – you’ve earned a free ride. If you’re really well connected, then an affiliate program could certainly serve other people as well as giving you a nice return.

The secret to building wealth is simply to start…

Everyone who has wealth had to start somewhere. Maybe they started with a few pounds that eventually grew into six or seven figures. Or maybe there were fortunate enough to gain generational wealth and maintain it.

Regardless of your personal journey up to now, you must first choose to start saving and growing your money. A few years from now, you’ll only wish you started sooner.

 

Pension Checklist: 3 Things You Need To Know

Pension checklist: 3 things you need to know

The last 3 weeks of the WealthTalk podcast have been focused on the 2nd pillar of wealth, which is Pensions.

I believe that pensions are the most over-looked and under-valued asset of all 7 pillars.

It’s true that the word ‘pensions’ isn’t the most exciting topic when it comes to wealth-building, however, it is where people rely on putting their money in order to create their future retirement wealth …and there are some big mistakes that I see.

The biggest one being that most people simply ignore it, ‘hoping’ that things will turn out for the best. And that’s a big risk to take.

This post is written to help you look at your current relationship with your personal pension – which is most likely attached to your current or former employer.

However, it’s worth highlighting that state pensions continue to be pushed further and further away from reach, forcing those who will be relying on this to cover their needs in retirement to continue working close to, if not into their 70’s.

The state pension age is currently 65 for men. It’s gradually increasing for women from 60 to 65.

There are more changes planned. From 2019, the State Pension age will increase for both men and women to reach 66 by October 2020.

The Government is planning further increases, which will raise the State Pension age from 66 to 67 between 2026 and 2028. [Source: ageuk.org.uk]

Action #1: Might you have a lost pension?

In episode 017 of my podcast, WealthTalk, we discussed a staggering statistic that 1.6 million lost pensions pots worth nearly £20 billion could remain unclaimed according to latest research from the PPI (Pensions Policy Institute).

Do you want the good news? The process of finding out is really simple.

If you listen to this podcast episode you’ll hear from three members of the WealthBuilders community who share their story of how they were able to trace lost pension money, with a combined total of over £400,000 being rediscovered – now accessible and ready to put to work within one of the other 6 pillars.

I’d strongly encourage you to think back through every employer you have ever had and make certain that you’re not forgetting about any unclaimed pension pots.

You’ll hear just how simple the process of contacting your old employers can be by listening to the podcast below, or you can visit the Department for Work and Pensions and use their new service to help you find a lost pension.

 

Action #2: Understand the difference between a SIPP and a SSAS pension

Many people I meet refer to a SIPP [Self Invested Personal Pension] and a SSAS [Small Self Administered Scheme] in the same sentence as if they are the same thing.

A SIPP is a product, and therefore somebody else controls where the money is invested. You might choose the specific funds, but the point is that your only option is the stock market, and sometimes commercial property.

So for example, a holder of a SIPP wouldn’t be allowed to invest in property, they wouldn’t be able to join forces and collaborate, they invariably won’t be able to get leverage [the key to building wealth]. So in many ways a SIPP is actually quite restrictive, but it sounds better, because it says ‘self invested’.

The SIPP is a product, so you buy it off the shelf. A SSAS you have to create and also you have to be a business owner. That’s why we also refer to a SSAS sometimes as The Directors Pension. A SSAS is something which you take control of, and therefore it should be treated as a business.

Creating a SSAS can be transformative. Listen to episode 018 of WealthTalk below to hear three members of the WealthBuilders Community share how they have each created a SSAS and utilised their funds in different ways to help them transition from corporate jobs to setting up their own businesses.

If you’d like to assess whether you are eligible for a SSAS, you can visit our SSAS Eligibility page and answer a few short questions to find out more.

”Never let a month go by without taking some action to build your wealth”

Kevin Whelan

Action #3: Look to see if you can reduce the costs and charges of your current pension

When I work with clients one of the first things we do is to look at the charges, performance and risk of their current pension and see if we can make some immediate savings. I call this process a pension ‘CPR’, as we’re seeing if we can bring the pension back to life!

Let’s look at an example, and let’s give them a name – Angela.

If the value of Angela’s pension was £400,000, and she was in a typical SIPP, but she invests in funds, because there’s no other choice, then she might be paying between 1.5% and 2% overall. Let’s say it’s 2%, because that’s the average.

That’s £8,000 pounds in fees. I’m not sure about you, but that sounds like a lot to be paying someone else in fees.

So if Angela decides to draw down 4% of her pension then the fees are 50%!

In comparison,  a SSAS would be £1500 to £1600, because it’s not about funds under management it’s just about the administration, and providing the reporting to the Inland Revenue. So a SSAS is usually substantially cheaper over the long term.

We’ve created a SSAS MiniSite with more detailed information if you’re interested in learning more.

So …now it’s time for you to take some action!

And if after doing so, you have a positive story to tell – then be sure to post in the comments below so I can share on a future episode of the podcast to help inspire others.

If you’d like to listen to Kevin Whelan and Christian Rodwell summarising Pillar 2 [Pensions] then tune in below to Episode 019 of WealthTalk.

And don’t forget to subscribe so you never miss a new episode!

 

7 Secrets To Reducing Your Liabilities As Quickly As Possible

7 Secrets To Reducing Your Liabilities As Quickly As Possible

 

There are seven secrets to reducing your liabilities as quickly as possible to help you grow your wealth and / or increase the equity in your home:

1.       Always pay the lowest interest rate on everything you owe.

2.       After you’ve reduced the cost of your debts, maintain the same monthly repayment.

3.       Use a strategy to eliminate high cost credit cards

4.       Use the D.E.B.I.T.S formula to reduce your costs

5.       Use money you own to repay money you owe

6.       Make the most of pay-rises, windfalls and other income.

7.       Become a great sales person.

Each of these needs a little more context to make perfect sense, so let’s explore them one by one.

Secret #1: Always pay the lowest interest rate on everything you owe.

The maths is so simple: if you’re paying interest at 12% (as you would with many overdrafts) when you could be paying interest at 6% (as is typical of many mortgages), you are paying twice as much as you need to.  Of course not all deals are as good as they seem – you must read the small print.  A common incentive is to offer you a very low interest rate initially, which the lender is more than compensated for by charging you higher rates later on.  You could easily end up worse off. Do you know anyone who actually bothers to read the small print? Wealth-builders do! This is because they know there are no neutral decisions.

Switch to a lower rate whenever you can, but beware of penalties and charges – these are often hidden in the small print.  Timing is a key so switch at the point where charges and penalties will be minimal.

Quick win

With today’s flexible mortgages and loans, there’s absolutely no need to pay high interest rates.  You could, for example, merge your Credit Card debts into your Mortgage debt and keep paying the repayments as if you still had the Credit Card debt.

Let’s say you had £5000 of debt on your Credit Card.  The interest rate was 15%. You paid £75 per month. This would take you 142 months to clear.  Merging this with your Mortgage debt but maintaining that £75 payment, this time into your Mortgage repayments, will clear that debt in 78 months.  You will have wiped out that particular debt in almost half the time.

Combining all your debts into your Mortgage is often the best and fastest way to reduce and then clear your debts.

Of course, Lenders protect their profits with exit charges and penalties, so do this wisely.

Three questions can help protect you:

·         How much am I really borrowing including the set-up costs and insurance?

·         How much will it cost me over the full-term of the debt?

·         What extra charges will the lender impose if I pay off the debt early, or if I miss a payment?

Of course, you should always think carefully before turning unsecured debt into secured debt, but if you have a workable plan to become debt free, and you stick to it, you’ll be in a far stronger position.

None of this is in the interest of the lenders, so they will immediately seek to seduce you with new offers.  Say, ‘No!’ It is all too easy to make this common mistake – merging your debts then increasing your borrowing!

Research, Research, Research

How would you like £22,500 to invest or use as you choose?  That’s the difference that a 1% cheaper interest-only mortgage can make over 25 years, if the mortgage was just £90,000.  What a great example of how a bit of homework could pay off.

Wealth-Builders have an “opportunity mindset” so keep your debts as flexible as possible so that you can move them again to save more interest if the opportunity arises.

Secret #2: After you’ve reduced the cost of your debts, maintain the same monthly repayment. Ideally, pay more to your lender than you were paying before.

As I mentioned in the first secret, a key to success is to maintain your former payment when you switch to a lower cost debt.  You will have got used to the money going out each month, so without changing your lifestyle, you’ll now be reducing your debt more rapidly.  If you don’t do this, the funds you’ve freed up will disappear into your living costs as if by “magic”.

If interest rates drop, maintain your level of payments – it just means you’ll reduce your debt at an accelerated rate.  If interest rates increase, increase your payment to keep pace – being debt free is the focus and you don’t want to put off the arrival of your Debt-Free-Day.

How about paying more than before?

Unless you have fixed-rate debts, the interest rates will fluctuate.  If your interest rates went up by 3%, would you still be able to cope?  If the answer is ‘yes’, make the higher payments as if the rate has gone up.  You don’t need to pay what your lender tells you, you should pay as much as you can afford.

By practising paying a higher interest rate than is currently being charged you’ll put yourself in a stronger position to cope with rates if they do increase.

Another great way to accelerate the day when you’re free of debts is to allocate a fixed percentage of your income to help reduce your debts.  Many people start with 10%. This simply means 10% of your income goes towards clearing your debts – with no arguments! Once this becomes a habit you’ll find you have easily adapted your lifestyle to work with this powerful discipline, with no loss of quality of living.

The good news is that if you have flexible debts, you can get back any extra money you’ve overpaid if you find your level of repayments begins to affect your quality of living.

 

Secret #3: Strategy to eliminate high cost credit cards

You will have grown used to making a certain level of payments each month.  All debts, however, are not equal when it comes to interest rates. The next secret works well for any debts that you cannot merge into your mortgage.

First take each and every remaining debt and reduce the payments to the minimum monthly cost required by your agreements.  Then, channel the balance between this and your former total payments into the most expensive of the remaining debts. If you then stick with this plan until the debt at the highest interest rate is cleared, you can then use the same strategy with the next most expensive rate… and so on.

This is one way to really get your money working harder for you.  Be bold too, and cut up those credit cards once they’re cleared.

”Never let a month go by without taking some action to build your wealth”

Kevin Whelan

Secret #4: Use the D.E.B.I.T.S formula to reduce your costs

As I mentioned earlier, every financial decision is a plus or minus – it is either taking you down the down escalator, or it is helping you up the up escalator.  Money is your servant who needs to work hard for you. This means that if you are really serious about owing nothing and owning everything, you need to look at the detail and not just the big picture.

Exercise: Your Ins and Outs

Take a large sheet of paper and turn it so that it is landscape rather than portrait.  Divide it into two headed columns entitled: “Money In” and “Money Out”. Under the “Money In” heading list every financial input to your life: salary, pensions, benefits, investments – and leave space for more because you’ll often find you have income from sources you’d not thought about.

Then, under the “Money Out” heading, list all your payments: tax, debt repayments, insurance, utilities, household expenses, rates, travel and motoring costs.  The easiest thing is to run through your statements to highlight your monthly expenditure. Be careful to notice any quarterly or annual payments, and convert these into their monthly equivalent.

Add up the totals, and deduct one from the other.  The result should be a positive balance in favour of your income.  This lets you see for yourself how much more capacity you may have to accelerate the day when you become totally debt free simply by increasing your payments.

There is more you can do, however, to improve your situation.  Look at your list of payments and begin to interrogate them. Are you paying too much tax?  Are your allowances correct? Could your insurance be altered now that you’ve adopted a positive lifestyle change (e.g. giving up smoking)?  Is there a more appropriate tariff for your mobile phone? What better deals are there available for your utilities?

Compounding Your Success

If you find an improvement, take action, no matter how small the saving.  This is important because saving £20 on a monthly Gas Bill represents far more than the face-value of the £20.  If that £20 saved is then used to reduce another debt, you’ll have compound interest working for you.

I can illustrate this by thinking about a Store Card.  It is not uncommon for these to have interest rates in excess of 30%.  If you put your saved £20 per month into paying off this Store Card, you’ve got that 30% working for you.  To give you an idea of the scale of the impact this can have, £20 at 30% for ten years would transform £2400 into a staggering £13,297.28!  That’s an absolute fortune saved in interest.

Secret #5: Use money you own to repay money you owe

The Banking industry was founded on a simple idea – wealthy investors would deposit their money in a bank in return for security and for some interest on their deposits.   Banks, on the other hand, would then lend that money out and charge interest. The difference between the savings rate and the lending rate led to the Bank’s profit. The same is true today.

You may well have a loan from the very same bank or building society in which you have savings.  There is a direct link between what you own and what you owe, and unless you recognise this link, you could be losing out not just once but twice.  Your income from your savings will be at a lower rate than the cost of borrowing. Furthermore, any income from your savings will attract tax.

With today’s flexible loans and mortgages you really don’t need to have savings for a rainy day – not if you’ve got loans.  The secret is to use money you own to pay off money you owe. Let me illustrate with a quick example. If you have £10,000 on an overdraft at 12%, this will cost you £1,200 per year in interest alone.  You might also have £6000 in savings laid aside for emergencies. If this earned 4% interest before tax (or lower as is the case in the current climate), you’ll be left with 3.2% after tax at the basic rate.  That’s £192 income per annum. This means that if you maintain this arrangement, you will pay out £1008 in interest (£1,200 – £192).

If, instead, you use the £6000 to reduce your overdraft to £4000, the overdraft rate of 12% will cost you £480 in interest.  That liberates £528 that you would otherwise have given to your bank under the former arrangement. Yes, that means you’re £528 better off a year!  The overdraft is a flexible solution – so you’ve kept control and if you need to draw in an emergency, you’ve still got the facility. Your savings just were not working hard enough for you.

Taking cash that you own to repay money you owe is the most straight-forward, tax efficient, guaranteed, risk-free solution to making your money work hard for you.  Since it works, every time, it becomes an easy and exciting step on your adventure to becoming debt free.

Connecting your income to your debts

It can get even better.  With some research you can find banks, loan and credit card companies that will link your bank account to your borrowing on your behalf – saving you time.  These innovative lenders offset your income against your borrowing.  Let’s say you have a mortgage of £72,000 with the same bank your salary is paid into, and that the accounts are linked.  The interest accruing on many mortgages is calculated on a daily basis. If you receive a salary payment of £2000, under this system the £2000 will be taken off the £72,000 and interest will be charged only on £70,000 that day.  This means that your salary is effectively earning the same rate of interest as your mortgage and doing this tax free.  If that £2000 remained in your normal bank account, any interest earned would be taxable.

Using an innovative system like this links your bank account to your borrowings, and ensures that all your money coming in is immediately offset against your debts.  In this time-saving, stress-free system, you’ll minimise your interest payments and save tax too.

Secret #6: Make the most of pay-rises, windfalls and other income.

Once being debt-free becomes your focus, you’ll find fresh motivation to turn this quest into great fun.  Financial ‘fitness’ can become a healthy obsession, just like many people get hooked on physical fitness.

A debt-free focus like this will really benefit from setting up rules that are non-negotiable and so take no effort or thought.  One such rule should be to set aside a fixed-percentage of any fresh income to further your journey towards debt-free status. That could be 10% or even a more daring 25%.  Of course, this dove-tails with our second secret where I suggested you set aside a fixed-percentage of all your income for clearing your debts more quickly. Here, I’m simply suggesting you get more daring and elevate the percentage for unexpected increases in income.  Don’t wait until it happens, set up the rule in advance – then you’ll have no cause to hesitate.

When you are in debt, you have, in a sense ‘mortgaged’ your future.  You’ve traded your future income-earning potential to live in the present.  This makes you vulnerable since your ability to earn can easily change at any moment.  You may not want to work in the future, and you may not be able to work in the future. You could even be unemployed.  Those thoughts can become positive motivators. When an opportunity arises to work a few extra hours each week, you can see this as taking back your future income.  A little more effort now frees your future.

With that in mind, you can have fun with this too.  “Overtime” is a quick win. Alternatively, having an additional part-time job will give you variety, income, and the chance to mix with a different group of people – after all one of the key benefits of work is the social aspect, another facet of true Wealth.

If you are feeling more adventurous still, you could start your own business and use the extra money to reduce your borrowings (an exciting concept covered in my chapter on the 5th Pillar, “Own Business”!)  If this business harnessed a hobby you were particularly interested in, you’ll be amazed at how motivated and successful you can be and at the amazing tax advantages!

Secret #7: Become a great sales person.

Wouldn’t you like to reclaim your storage space and get some cash in the process?  Storage space is a liability if it’s not earning you money!  With technology changing by the day, it’s all too easy to end up with hardware you just don’t use anymore.  Add to that sports equipment from the hobby you lost interest in, clothes that don’t fit or have gone out of fashion, and things that you haven’t used for months – and all of a sudden you’ve got a resource you can transform into cash.

Take a good look around your home, loft, and garage and identify unused items of value.  To maximise the benefit, make a list and include everything you don’t need or haven’t used for six months.  Either you will end up with much you can sell, or you’ll remember the value of your investments and get some fresh pleasure from them.  Either way, you win!

By now, you’ll be getting good at research, so find out how much you could raise, then put your sales’ hat on.  You may even be able to knock thousands off your debt – just with resources you’ve got but don’t use. From Car-Boot Sales to eBay, from Amazon to the local paper, it’s never been easier to advertise and sell your ‘stuff’!

”Remember that any savings made should be used to build your wealth and to be spent or left sitting in your bank.”

Kevin Whelan

 

Are You A Drifter, A DIYer Or A Dynamic? (The 3 D’s)

Are you a Drifter, D.I.Y’er or a Dynamic?

 

Statistics would suggest that around 95% of people who wish to become financially independent never make it.

So why is this?

The skill at WealthBuilders is really helping more people to reach that. But there’s a little bit of self-analysis you can do. In the number of years that I’ve been talking to people and helping them create financial independence for themselves, I’ve noticed there are three groups of people. I call them the three D’s and it doesn’t take me more than about five minutes to work out who you are, and whether you’re likely to be part of the 95, or part of the 5.

Would you like to know what they are?!

1. Drifters

The drifters are people who read a lot, think a lot, aspire a lot. They are definitely interested in being wealthy, but being interested and being committed are very different things.

We’ve all heard the jokes about ‘shelf-help’ and course junkies,  however it is a sad consequence that they simply will remain financially insecure for the rest of their lives and that’s a very bad place to be. And I think the main reason for that is they just drift from day to day.

This idea of being caught in the rat race, or caught in some tyranny of a daily routine, that they don’t allow themselves the time, or are willing to find the time to get the right education, the right support and the right connections to pull this together as a plan.

So they’ll turn up for their job, they’ll go home and instead of taking some time out of their life to be thinking, “Well, how do I create wealth for myself,” they’ll watch the telly or have a glass of wine and forget the world till the next day …and that’s pretty much what most people are like.

One of the dangers I think with the drifters is they want to seek so much information, but they’ll act on nothing. So they’ll do this course, and then they’ll do that course, and they’ll do the next course, and they’ll do the next course.

Instead of stopping after course one to decide whether it’s the right thing to focus on further and to see whether they can take action and seek out who else has done that, and find out what lessons can be learned, they don’t do that.They only do the education piece.

And this is often followed by “Oh, well I need to know something more now. I need to know the next thing,” and they keep going round this sort of intellectual merry-go-round. And of course, merry-go-rounds or roller coasters are great when you’re a kid but not as you get older. They can make you sick after a while.

2. D.I.Yers

Now, there’s nothing wrong with the second D, the second D is what I call the D.I.Yers.

The D.I.Yers are not drifters, they’re willing to get their hands dirty, they’re willing to get involved and do something, and that’s good. But one of the issues with D.I.Y is that there are some things you can D.I.Y: simple things like wiring a plug. But I wouldn’t re-wire my own house.

So there are some things you should D.I.Y, and some things you should not.

One of the consequences of the D.I.Yers, is they actually can’t get to a place of trust. They don’t find anybody that they can truly trust, and they aren’t so willing to make connections, they want to do everything on their own. They live their life almost in a trial and error scenario but they can make some progress.

I have to say at the beginning of my wealth building life I was a D.I.Yer. I didn’t have a guide, I didn’t have a mentor, I didn’t have that opportunity because I was carving my own path. But now having learned the lessons, and it took me too long because I was blazing my own trail, let’s say.

So being a D.I.Yer you can create wealth, it just takes you longer.

To speed them up we’ve created some great materials for people who prefer to do things on their own and learn at their own pace.

 

3. Dynamics

When you think of Dynamo, you think of energy, and you think of energy. So dynamic people are turbo-charged and so focused and committed they don’t let anything slow them down.

They learn, but then most critically – they do.

Dynamics look for and get multiple returns on their money.

And what I mean by that is, just enjoying money. Enjoying the connection you have with other people as you see people teaching you things, you teaching other people things, sometimes actually joining forces with others as well. It’s just a fun place to be for those who want to do that.

And while I recognise that’s not for everyone, I think there’s definitely an aspect of enjoying what you do with money. And enjoying building your wealth, rather than just simply parking it and not really feeling like:

A) you’re in control, so you’re not in control of your return of your investment

B) you’re not really enjoying it.

One of the characteristics of a Dynamic is that they’ve really taken the time to invest in themselves and understand themselves. They show a willingness to understand where they can bring value and add value in order to build their wealth. And the best tool to help people to identify this really quickly that I have come across is Wealth Dynamics.

“Never let a month go by without taking some action to build your wealth”

Kevin Whelan

How can you tell which one of the 3 D’s you are?

In my experience people can be completely financially independent within about three to seven years. So let’s take five as an average.

What I’ve learned over the years and now is that it’s much better, faster, enjoyable to work with people and collaborate.  Hence why at WealthBuilders we teach the process of education, support and connection.

And surrounding yourself with other people just gives you so much energy, and makes it so much more enjoyable and quicker.

One of the ways I find that out about people is, if I ask them “How has your wealth changed from five years ago? What have you done that’s made you wealthier five years later? So if you go back five years and you look now, how much wealthier are you than where you were before?”

For most people the answer is, they’re not wealthier at all. In some cases they’ve either gone backwards, or they’ve stayed exactly the same.

You don’t have to spend too much time, a couple of hours a month is enough of a commitment to take small steps towards building your wealth. You’d think two hours a month people could spend …not just to learn something, but the key is the doing.

No matter which of the 3 D’s you identify with, we’ve got plenty of free resources to help you get started.

If you’d like to hear an extended version of the 3 D’s then tune in below to Episode 002 of WealthTalk. And don’t forget to subscribe so you never miss a new episode!

 

How Much Are Your Investments Being Eroded By Support Costs?

How Much Are Your Investments Being Eroded By Support Costs?

 

Let’s reflect for a moment on the costs you pay when you invest money.

In previous blog posts we have talked about the importance of getting more value than what you’re spending, but today we’ll talk about an area where that is not always the case which is in the area of investments.

If an accountant charges you £3000 but saves you £15,000 it is easy to recognise the value, but where costs are hidden it is not so easy to see.

From our experience of those people holding financial products such as ISA’s and pensions – which are often used by people in the U.K to build their wealth, there are commonly fees from the custodian, fund manager, advisors for the investments held within these protective wrappers …and when you add it up this can come to 2% which on face of it may not sound a lot, but if the average gross return you’re getting is 6% –  it means you could be paying a 3rd in professional fees.

If the financial industry is removing 1/3 of your profit without putting any of their own money in, or taking any of the risk, and the markets begin to fall – then you may need to give this area some attention if you’ve been ignoring it (which most people are).

Support costs are the sixth and final component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there – no matter what stage of your wealth-building journey you are at.

If you’re not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

 

Low Cost Tracker Funds

You may well currently work with an Independent Financial Advisor [IFA], and indeed I am one myself – however my mind does not work in the same way of most IFA’s whom I have met.

Rather than recommending products for which I may or may not receive a commission should you choose to invest in them – my preference is to empower you with the knowledge to be in control of your own investment decisions.

There are many ways you can buy very low-cost tracker funds or even things known as ETFs or (exchange-traded funds) where the cost of buying into investments is a fraction of the cost of paying for a fund manager.

And, if you’ve got an advisor, are you sure you’re getting real value? Have they plugged a siphon into your life and taken money out, or are they giving you real value for money back? Well, that’s for you to determine.

If you’ve got an advisor, are you sure you’re getting real value? Have they plugged a siphon into your life and taken money out, or are they giving you real value for money back?

Which Other Assets Might You Be Over-Paying On?

At WealthBuilders we believe that there are 7 ways [and only 7] to build wealth. We refer to these 7 ways as ‘pillars’ – and each pillar is an asset class which can be used to direct a flow of money into your life. If this concept is new to you, I recommend you take a listen to Episode 007 of WealthTalk: The 7 Pillars Of Wealth to learn more.

One pillar in particular where costs can very often be reduced is Pillar 2: Pensions.

Every week at WealthBuilders we meet people who are dissatisfied with the performance and future outlook of their pension(s), and it usually doesn’t take very much to instantly identify some ways to reduce their current fees as an immediate way to help save money.

We call this process a ‘Pension CPR’ and if you would like to speak to a member of the WealthBuilders team to find out more then please send us an email.

 

You Can’t Hide From Tax But You Can Certainly Mitigate It

You Can’t Hide From Tax, But You Can Certainly Mitigate It

 

Tax effects us in every aspect of life, and there’s no escaping it. It is such an all-pervasive thing, so everyone needs to have a tax strategy – you should not just accept it and pay it.

As an employee you will be paying the highest rate of tax. Employees go to work, and before receiving their payment for the month – the Government has already taking it’s share and you receive what remains.

In contrast, when you own your own business, you earn money from the sales of goods – you are then allowed to spend the money you receive on business related expenses (which can also overlap in some cases with items you may previously have purchased with your own personal funds) – and then pay tax on what is left.

The reality of course is that there are far more caveats than the simplified explanation provided above. However the facts remain that in order to achieve wealth you will need to take control of the way in which money flows into your life, and if your only way is relying on someone else to continue paying you a wage every month, you’re going to find it very difficult to maximise all of the tax benefits that are available.

Tax is the fifth component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there – no matter what stage of your wealth-building journey you are at.

If you’re not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

Robert Kiyosaki, Author of the Best selling series of ‘Rich Dad Poor Dad’ books preaches the benefits of owning a business

In Order To Build Wealth You Need To Think Like An Entrepreneur

Only when you begin thinking with the mindset of an entrepreneur as opposed to the mindset of an employee, can you begin to offset things against tax.

In episode 005 of the WealthBuilders Podcast: WealthTalk, I discussed ‘Wealth Mindset’ – being able to look at ways to add or create value. If you haven’t yet listened to this episode, or indeed subscribed to receive an update of new episodes when they are available you can listen and subscribe here.

It’s also worth mentioning that whether you are employee or a business owner, it pays to get a good tax advisor because they will save you more than they cost. If you have any difficulties in finding a good tax advisor yourself, request access to the WealthBuilders Facebook Community and drop a post in there and tag me – I’ll do my best to put you in touch with some people to speak to.

Tax Freedom Day: Are You Ready For A Shocking Statistic?

Every year, the Adam Smith Institute calculates the number of days the ‘average’ person would have to work just to pay off their taxes.

In 2018 every penny the average person earned up until May 28th went straight to the taxman. From May 29th (Tax Freedom Day) onwards, the average person got to keep every penny they earned.

To work out the date, ASI added up the total tax take, including indirect taxes (such as VAT and corporation Tax) and direct taxes (income tax and national insurance). It then divided the number by the UK’s net national income, a figure which encompasses the income of households, businesses, and the government.

 

The More You Save, The More Wealth You Build

You could have fun trying to work out how many taxes there are. But it wouldn’t be lost on you to realise that here at WealthBuilders we’ve got all the tax strategies in place.

If you’re a business owner, and many of our clients are, did you realise it’s possible to get tax relief on that, too?

So the government is paying you to be insured, because they want you to be a responsible business owner. And that tax relief will reduce the premium. And if that reduces the premium, it puts more money in your account.

It’s called relevant life insurance, and if you would like further information to find out if this could apply to you then simply reach out to us and one of our team will be happy to help.

So whatever aspect of your work, whether you’re in a job, which is where the highest taxes are paid of course, or if you’re self-employed or you have a business, there are many ways where you can reduce tax. And if you can do so legitimately and claim tax relief back, in other words get money paid into your account from the government instead of paying it, then of course all of that activity is going to help you create more wealth for yourself.

 

Tax is such an all-pervasive thing, so everyone needs to have a tax strategy.

Kevin Whelan

Founder, WealthBuilders

 

What’s Your Policy When It Comes To Insurance?

What’s Your Policy When It Comes To Insurance?

 

We all know that insurance is important in life. But it really should be important for those things that would be disastrous if you lost them.

It’s worth knowing for every area of your life what your risk is: if my house burned down, would it be life changing? Well the answer, of course, would be yes. The same answer would apply if you were diagnosed with a terminal disease, or were involved in a life-changing accident …which is why life insurance and perhaps also disability insurance are also important things to cover.

Bu what if your washing machine broke down? Well of course that isn’t a life changing situation. And does your iPhone really need to be insured?

So when deciding on what items you should be insuring the above question is a great place to start.

Insurance  is the fourth component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there – no matter what stage of your wealth-building journey you are at.

If you’re not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

How many things are your currently paying insurance for that wouldn’t be a matter of life or death should things go wrong?

Insurance Is About Mitigating Risk

You have to decide as to how much risk you are prepared to take.

You either take the risk fully, you part-mitigate or you fully mitigate and insure everything.

When it comes to your life insurance, as you repay what you owe, your need for life cover diminishes – and you might be able to replace your cover at a lower cost.

That decision is for you to make, but realise that not everything should be insured, and it is here that you can use the money you have saved and put that to work harder for you.

And the simplest asset to build right at the very start is just simply to use very low-cost tracker funds, which costs almost nothing. Very low cost to start, and at least providing you with the feeling that you’re seeing something accumulating in your life.

And by the way, I talked in an earlier blog post about the importance of eliminating debt. It’s possible that while you’re eliminating debt, to reduce your insurance at the same time, so that you make your insurance fit your actual situation rather than assuming that the insurance you buy is set for the next 10, 15, or 20 years.

Are You Paying For Insurance You Were Not Even Aware Of?

As with the other components of D.E.B.I.T.S that combine to create your financial foundation, many of the same lessons from one area can be applied to another – which means that you can save time when ticking all of your items from your checklist.

For example, in my blog post about Bills I encouraged you to take out a highlighter pen and go through your utility statements to see how much you are paying, or to review online [much more common these days]. Well you can easily combine your insurance costs into this same exercise.

And by checking through the last 3-6 months of your online banking statements you may also spot occurrences of insurance which may have inadvertently been added on to purchases which you do not require.

Relevant Life Insurance For Business Owners

If you’re a business owner, and many of our clients are, did you realise it’s possible to get tax relief on that, too?

So the government is paying you to be insured, because they want you to be a responsible business owner. And that tax relief will reduce the premium. And if that reduces the premium, it puts more money in your account.

It’s called relevant life insurance, and if you would like further information to find out if this could apply to you then simply reach out to us and one of our team will be happy to help.

The key thing is to only insure things that are really important to you.

Kevin Whelan

Founder, WealthBuilders

 

Why It’s A Smart Idea To Have A Process For Monitoring Your Bills?

Why It’s A Smart Idea To Have A Process For Monitoring Your Bills

 

Bills …we all have them, but do you have a process in place to ensure that your bills are not diverting more money away from wealth-building activities than they should?

As more and more of us switch our banking and the way we manage our subscriptions and utilities online, no longer do we receive such a visual reminder as that paper statement arriving through our postbox reminding us of our renewal costs, or increases in charges.

And this means that it’s a smart thing to be checking in on your outgoings for all bills that you have at least once a year – as the chances are that with some small changes you can ensure you’re paying the lowest rates, and that means more money that you can reinvest into building your wealth.

In this blog post I’m going to focus on ‘Bills’ – the third component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there – no matter what stage of your wealth-building journey you are at.

If you’re not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

Use some of the comparison websites to easily find out if you could be paying lower rates for utilities and other bills

Review Your Bills Annually

Whilst reviewing your bills probably isn’t top of your list when it comes to focusing on activities that can help build your wealth, look at it as a step by step process that is assisting you to reach your Financial Security Figure [Step 2 of the Levels of Wealth].

Just as I am sure you seek to earn as much as possible from each of the assets that you earn, why not also aim hard to drive down your costs at the same time, and this has become so much easier nowadays thanks to the huge range of money saving and money comparison websites …moneysavingexpert.com being just one that is widely recognised in the UK.

At the same time as reviewing your bills, you might also find it a useful exercise to check through your bank statements from the last 3 months to ensure there are no unwanted subscriptions or unauthorised charges being taken without your knowing. This exercise in itself can often help you to find extra savings which would otherwise have continued to go unnoticed.

In fact, it is extremely important that you know exactly what your monthly minimum cost of living equates to because this number will be required to calculate level 2 on then 5 Levels of Wealth, which is your Financial Security level.

If you haven’t yet worked out your Financial Security Level, or would like a recap on the 5 Levels Of Wealth you can watch this video where I explain the process in more detail.

Re-invest The Money Saved Back Into Your Education

If you can find a way to save £500 per year on your Gas & Electricity by switching to a different provider, then what can that £500 be put towards instead?

One suggestion might be to put it back into some education [the second component of D.E.B.I.T.S], which essentially means you’re now getting your education for free. Instead of working harder, you’re working smarter to achieve the same outcome.

When you apply all 6 components of D.E.B.I.T.S and discover savings of up to a few hundred pounds that you didn’t realise were already there, and then re-invest that into your education …you’re already one fifth of the way to turning another wheel, and that means more recurring income into your life and a step closer to reaching the next level of wealth you wish to achieve.

Let’s be clear. You cannot save your way to wealth. The idea is not to penny-pinch, but to be efficient.

Kevin Whelan

Founder, WealthBuilders

 

Is Your Education An Investment Or A Cost?

Is Your Education An Investment Or A Cost?

 

Have you ever heard the saying ‘all leaders are readers’?

Or perhaps the quote from the late Jim Rohn, where he quipped ‘Successful people have libraries. The rest have big screen T.V’s’.

Today we have the fortune of not just being able to read books, but to consume information digitally in the form of eBooks, podcasts, audible books and videos and through an almost infinite number of platforms which deliver new information to us at frightening speed from every conceivable corner of the earth.

The information age has levelled the playing field, and there is no excuse to not invest your time into those tasks which are going to lead you towards success, rather than steer you towards a life of mediocrity.

In this blog post I’d like to focus you on the second component of D.E.B.I.T.S, which is the Foundation stage of what we teach at WealthBuilders; finding extra money in your life that you simply did not realise was there – no matter what stage of your wealth-building journey you are at.

If you’re not familiar with (or simply need a refresher) on the 6 components which form the Foundation and spell out D.E.B.I.T.S then head over and watch this video now.

Use the additional money that you discover through applying D.E.B.I.T.S in furthering your education

Is All Education Good Education?

When it comes to building your wealth it’s important to seek the right education.

Unfortunately wrapped up with the enthusiasm and passion of genuinely wanting to learn more, there is a danger that your money is just going to be spent with people who perhaps just want to make money from that education, rather than genuinely being on your side to try and help you build wealth for yourself.

And this feels like a good time to reiterate a message which is really important to take on board. WealthBuilders is a genuine community, and we’re very much (if you remember our values) about sharing information and knowledge with others both ahead of you and behind you. We’ve got many, many ways we can show you how to participate in some education either at a lower cost, or a fraction of the cost, and indeed sometimes we can even show you ways by using leverage of something you already have (for example, your pension).

Education Is just 1/5 Of The Equation

Do you remember the ‘Wheel of Wealth’?

I’ve worked with many, many business owners, entrepreneurs and property investors over the years and one thing I see so often is that they rush into projects with a whole lot of enthusiasm and a little bit of education …and nothing else!

That can work OK sometimes, but when it comes to building wealth I much prefer to follow a proven system that has been tried and tested by others who have already established a successful track record in the asset class that I’m wishing to focus on.

That’s what led me to realise that without the 5 essential parts of the ‘wheel’ then you’re leaving yourself open to problems.

The ‘wheel of wealth’ is absolutely fundamental to making sure that any asset class you want to focus on will generate a consistent recurring income for you, and after all, an asset is something that puts money in your bank account while you are asleep …and you do not need to be there in order for that to happen.

I’ve recorded a video which show’s you exactly how the wheel applies to your wealth-building process, no matter which asset you are wishing to focus on. You can access the video within our free WealthBuilders Membership Area, and if you’re already registered you can get access for free here.

When you apply all 6 components of D.E.B.I.T.S and discover savings of up to a few hundred pounds that you didn’t realise were already there, and then re-invest that into your education …you’re already one fifth of the way to turning another wheel, and that means more recurring income into your life and a step closer to reaching the next level of wealth you wish to achieve.

In order to reach a higher level of wealth it’s absolutely essential that you reach a higher level of education than you are currently at.

Kevin Whelan

Founder, WealthBuilders

 

Are Your Ready To Become Debt Free?

Are You Ready To Become Debt Free?

 

Here’s the reality. When you own money to anybody, you’re in debt.

Don’t be fooled by the labels. It doesn’t matter whether it’s called mortgage, loan, overdraft, finance, credit card or store card. It’s not even relevant that they may be charged at different interest rates. They are all debts!

When you owe any money, you need to follow a plan to repay it as fast as possible.

Debt is the first of 6 different aspects we cover in the area we at WealthBuilders refer to as the ‘Foundation’.

In a previous blog post we looked at these 6 areas, which we have named as D.EB.I.T.S to help you remember them more easily.

Today, we’ll delve a little deeper into some of the ways you can tackle any outstanding sums you may have due, which will accelerate you towards your own debt free day much, much faster.

Are you digging yourself a bigger hole by not being fully aware of everything you owe?

You want to buy a home. You’ll borrow a vast sum and take many years to repay it. Your lender can charge you a low rate because it has plenty of time to make a profit. It even takes extra security by putting a charge on your home in case you don’t pay. This debt is labelled “mortgage”.

So you want to buy a car? It depreciates in value over a short term. Your lender has to make its profit in less time, perhaps five years. It charges you more and labels the debt “car loan”.

You want ready-cash to buy Christmas presents. Flexible, easy access money. Your lender may have very little time to make a profit. So it charges big money and labels this debt “credit card”.

The simple truth is that being in debt seriously damages your wealth.

Going Back To Basics

Help yourself bring it into focus. Get out six month’s bank statements. Grab a highlighter pen – the brighter the better. Then look through your statements and underline every entry where you make a repayment on money you owe. Then add up the numbers and see just how much you’re spending on debt. You might be in for a shock!

If you use online banking, this process can be even easier and will often highlight certain subscriptions and annual renewals for products and services you had completely forgotten about – and no longer need, meaning yet more pounds in your pocket which can now be put towards wealth-building activities.

Is Any Debt Acceptable?

A mortgage has the appearance of an acceptable debt. In fact, a large mortgage is often portrayed as a status symbol. A sign you have a substantial income to qualify for it. But here’s the reality. It’s a noose around your neck. And it could have a tight grip on your money for years and years. Is that acceptable?

Here’s a funny thing. When some people are asked if they have any debts, they say “no, only my mortgage”. It’s incredible. The lenders have successfully conveyed their potent message.

Prove to yourself the word debt has negative connotations. Tell your friends you have debts of £100,000. And watch their reaction.

Always refer to your home loan and any other money you owe as debt. It’s a constant reminder your cash is gushing out of your pocket. Highlight the negative and you’ll want to become debt free much quicker.

Marshall the forces and use the full power of your monthly repayment to eliminate your debts

This secret works on those debts you can’t transfer into your mortgage or loan. Its purpose is to eliminate what’s left.

You’ll kill off your most expensive debt first.

Do it like this.

Put all your debts onto the minimum payment. Then without altering your overall monthly payment, channel your money into your most expensive debt. You’ll have compound interest working at its hardest. Over the months, this debt will disappear before your very eyes. And when it’s gone, you’ll feel great. You’ll have cleared your most expensive commitment. Don’t forget to cut up the card and shred the paperwork!

Now comes the good bit. Take the money you were paying into your most expensive debt and add it to the minimum payment on your second highest debt. It’s obvious what will happen. You’ll have much more money working hard to eliminate this one. When it’s gone, move onto the next debt. Repeat the exercise until they have all disappeared.

This secret will bring forward your Debt Free Day surprisingly quickly.

On the journey to your Debt Free Day, the simplest, most effective way is to become debt free as quickly as you can. In the process, you’ll save a fortune in interest. Leaving you perfectly placed to save a fortune in cash.

There’s nothing more to it. Don’t put it off any longer. As they say, time is money! Think about yours. Then take action. Because knowledge without action is pointless.

If you don’t already have access to the WealthBuilders Members Area where you can begin to focus on building wealth at the same time as eliminating your debt, then you can register for free here.

It doesn’t matter whether you can afford the payments. The real issue is this. When you’re in debt, you’re voluntarily giving your money to someone else.

Kevin Whelan

Founder, WealthBuilders