7 Assets To Generate Future Income

Transcript

Speaker 1 0:01
The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.

Speaker 2 0:17
Today's episode is brought to you by wealth builders membership a proven step by step process that helps you achieve financial security within two to three years. Find out more head to wealth builders.co.uk forward slash membership.

Christian Rodwell 0:32
Hello, and welcome to this week's episode of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And it's great to have you here today. At wealth builders our mission is to help our members achieve financial security in under three years. And if you listen to our podcast regularly, you will know that the only way to create financial security for yourself and your family is to focus on generating income from assets that you either own or control. And the good news is there are only seven assets. So in today's episode, we are replaying a workshop which is presented by Kevin Whelan, the wealth builders founder. And in workshop, Kevin's going into detail on how you can identify the assets which you currently have in your life, and those which you could leverage and begin to generate streams of income. So whether you're a business owner who's trading time for money, or you're currently employed and looking to supplement your income, and whether you're at the beginning of your wealth building journey, or you've already begun to build some asset income, we can help. And we're here to support you. And we welcome your feedback. As always, we're always available to chat with you about how we work with our members to create their own unique plan to achieve financial security or independence within three to five years. So for more details, do get in touch with us head to wealth builders.co.uk or drop us an email at Hello at wealth builders.co.uk. Okay, so let's hear from Kevin now, and learn how you can generate future income using one or more of these Seven Pillars of Wealth.

Speaker 3 2:08
The two big lessons that I'll share with you today are part of that step by step process that I've taught to literally hundreds of people every year, who are now well on their way to their own financial independence. So they can stop trading time for money, they can start to create that legacy that they really want to give. Or they just want to work on their own terms, not being in control of somebody else. So let's get into the first lesson. So the key distinction to make in wealth building is that wealth is income that flows from assets. So therefore, the process of building wealth is really quite scientific. So what I'd like to do now is show you what the seven assets are. But while I do that, just have a think, can you work them out for yourself, because what would be great, by the way, is I believe there are seven and only seven. And I have a standing challenge I always offer when I talk to anybody, and I share that with you. If you can find me asset number eight, we call these assets pillars. So if you can find me, pillar number eight, I'll send you a bottle or a case, in fact, are very fine champagne. But anyway, let's get to the lesson, let's talk about the seven assets. An asset is something you own, that is not you. It puts money in your bank account while you're asleep. And you do not need to be there for that income to continue flowing. And that's the key. You do the work once get paid forever. So yes, there's a little bit of hard work to understand some of these things. But in the art of wealth building, it's good to understand the basic principles so you can work with it on your own. Whether you choose to work with wealth builders or not, you should get some valuable information. And what I'll share with you is what I see is the most common mistakes made in each of the different assets. And what some of our clients do, to show themselves to be very savvy when it comes to maximising the value from their assets as opposed to minimising. So let's deal with asset number one. Home capacity. Well it most people live in a home. And for the most part, if we were to ask how much money is coming from your home and flowing into your life, month by month that will be zero because for the most part people live in their home and there's no income flowing into that. And the biggest mistake I see people making is over relying on the value of their home. And usually they discover that too late. What I mean by that is they get to a place at retirement, when they realise they haven't built assets, and they discover that they need to downsize or sell their home and buy something else. And they almost think that this will work for them. But let me show you why it almost never does. Let's take an example. If you live in a home, and let's say the value of the home was 400,000. And you decided to downsize to something else, maybe, you know, with the cost of a downsize, you move from a house to a flat, and you move from say 400,000 to 300,000. So you've got 100,000 leftover. But if you had 100,000 leftover, and you don't really know anything about wealth building, you've not spent any time in education, you've had no support, you've made no connections, you really are quite nervous, because you're at the end of your working life. How much will 100,000 pounds generate for you, if you put it in a logical place that people tend to put their downsides money, which is in the bank, mouth, so you've got 100,001%, you make 1000 pounds is it really been worth all that effort for less than 100 pounds per month as an additional income? I'm not sure that's the case. The sort of things are students to those who are dealing with the wealth building side of things, they will look at options. Now, none of these options are right for everyone. But at least we can discover and talk about some of this. Well, one would be taking the property and use the word capacity, and see that whenever the spare capacity in anything, there's an opportunity to make a game. If you think about capacity, let's say a restaurant with spare tables, or a hotel with spare rooms. And just imagine that concept of something that is underperforming, it's not maximising, there's always opportunity to create value, no less so with the home that you live in. And let's give you three different ways that you could use the capacity in your home to create an ongoing cash flow. Well, one easy way is to use the government rental room Skitch. And we've certainly had students do that, where they take a spare room in their property, and they generate an income, certainly up to seven and a half 1000 pounds a year, completely tax free by the way that would then allow them to use that money and deploy it or use it somewhere else in their wealth building life or to pay some of their expenses or to somehow start to do something that they weren't doing before when the home wasn't generating anything at all. The second is one of our clients had a property in the Heathrow area. And what she did is she built an extension, so she increased the capacity. And by building that extension, which she let out to pilots, and employees who were from the airlines, she was able to generate a regular income, which supported her retirement income. And the third, an easy way to be able to use the money now is to redeploy money from the capacity. So I don't mean taking the bricks and mortar and doing something with that. But getting access to the equity in the home through a re mortgage, for example. So many of our clients will take a real mortgage, they'll take that money and then deploy that and use that for some other assets. And we'll talk about that, as we get to know what those other assets are certainly, as far as building a property portfolio is concerned is short. So that's the ways that you can use home capacity to start thinking about building wealth. So what's asset number two? Well, this is an interesting one. Pensions now now, don't hit pause, don't hit snooze. Don't go away just because we're talking about pensions because this is the most undervalued, overlooked asset of the mall. It's incredible. What happens with People's Pension And I suppose it's because most people get their pension from their employer, or they get it when they're employed, and they put it into an insurance company, and so do not disturb till 6065. And the relationship they have with their pension money is often really bad. And consequently, the returns and the opportunity to do something better is massive. So what's the biggest mistake with pensions? Well, I think it's not having a relationship and realising it's money. And for many people, it's the biggest asset they'll have. And it's certainly the one that most people in the UK and indeed the US rely on more than anything for their long term retirement plans. And those retirement plans are often devastated by an over reliance on the stock market.

Speaker 3 10:54
But what are the opportunities? Well, it might shock you to realise there's 10 billion pounds worth of money in private pensions that people have simply forgotten. And almost the same again, in pension schemes that people worked in jobs, and they only work there for 234 years. And simply forget, women who get married, and they change their name, and they just forget to go back. All sorts of different things happen to allow this money simply, in many cases to disappear. So the first thing we do when we meet any of our wealth builder students, and they talk about Yes, I've got some pensions, is we ask them to do a stocktake. On their old workplace and their old pensions. Now, they never like to do it, who does. But let me give you three examples we had in a single week. Last year, three separate people with a little prod from our wealth building coaches found a sum total of over 400,000 pounds, that just from three people, one person found 55,000 pounds, in a no personal pension, another word worked for a company, and just simply forgotten all about it, and had a transfer value of 100,000. And another person just was getting a bit lazy. And I think they realised that and they said they'd get round to it, but they never got round to it. But then discovered it was 255,000 pounds. And this is just scratching the surface. So the amount of money that is left behind that can be repatriated, if you like, and then make good use of is the biggest opportunity in pensions. But let's talk about what you can do with those pensions, as well. The second thing that we do when we're talking to our wealth, and the clients of our pensions, is we breathe new life into those pensions, we call it a pension CPR, you know, this is what we're doing, we're looking at a review of charges of performance, and the risks that people are taking. Now, I won't go into details of all three. But I will talk about one because I think it's the only one that anyone can control. And they can control it now. And that's charges. Do you know that the average charge for the average person with a pension in the UK is 2% per annum. Now, when you think about the stock market, where the average long term performance, let's say might be, say 6%, when you iron out booms and the bumps, and you take all that into account, you imagine this is over the long, long term, because you can't control whether the stock market goes up or down. And if the average is 6%, but the average person is paying 2% in charges, then they're paying a third of their money to the institutions, whether it's advisers, fund managers, platforms, insurance companies, you name it. So the industry has created an asset assets on the management, they call it. And they are the people who are generating long term wealth, one would argue and one of the things you can do to change that relationship is to take more control over the pension and certainly over the charges. And the easiest way to do that is to become more active in being the manager into some degree of that pension. And there are ways you can dramatically cut the cost of those pensions from say 2% to maybe as low as point seven five or somewhere like that. So you can have for even better than half the cost, which therefore massively improves that long term return, whatever you doing, in terms of other assets. So that's a real big lesson that I hope will be useful for you to learn. And as I've been talking about taking more responsibility, and control over the asset we call pension, there is a bit of language, some terminology. And as we know, on a new journey, when you're discovering new things, there's new language. And this is definitely new language to learn. And this is the concept known as the small self administered scheme. Wow, that's a mouthful, isn't it? Small, self administered scheme, or SaaS? No, it's not software as a service. It's not the armed forces and the essay s, it's a small self administered scheme. In short, it means you become the legal owner and operator of your own pension. And we teach people how to do that. So they can make their own decision, choose their own level of support, invest in what they want to invest in. And as we talk about the other assets in a moment, I'll tell you some of the things our clients have done with their SAS that has completely turned their financial life around. Now, the third asset that people rely on, traditionally to build their wealth is as follows. Investments. Now what I mean by investments, in simple terms, is putting money in some form of a market over which you have no control. So for example, you can't control the interest rates in cash. And we know what they are right now. We cannot control how the stock market performs, we cannot wake up tomorrow and decide to spend more money in a certain area of our life, and suddenly the share price of that asset, or that product will go up, we simply cannot do that. So when you put your money in trust it to a marketplace, there are dangers, as far as the predictability and the cash flow is concerned. And the biggest mistake I see then, is an over reliance on the stock market. Because cash is so poor, most people buy and hope that things will work out. Now, as I said, when I talked about pensions, the long term investment return for those in the stock market is around 6%. But the big problem with that is the timing. You see this as standard thinking when it comes to the stock market, which is I call the accumulation thinking means you, you kind of build up a pot, and then at some point, you convert that pot in into an income. So let me take you back to the stock market crash of 2008. Not that long ago, but almost forgotten, but not in the minds of those people. Average people who saw 35 to 40% of the value of their investments in the investment and pensions, in some cases, just simply eradicated from their life. And if you were wrong on the timing, and you are planning to retire, just at that point, when the stock market goes and you have no way of recovering from that, then your wealth is not just devastated. You're affected for the rest of your life because you're always feeling nervous and having a life that's completely compromised. And that's a tragedy. So do you remember in video one when I talked about 95% of the population not making it to financial independence? This is the reason why. You know if you asked everybody, most people who are relying on these things, how much money is flowing into your life from your home capacity. It'd be a big fat zero. How much money is coming from your pensions today? If you're in your 30s, or your 40s or your 50s? That's a big fat zero. How much is coming from the cash in your life or maybe 1% of the cash, you've got to if you've got 100,000 It's 1000 pounds a year no more than that. And investments? Well, most people are trying to build that money up and not getting any cash flow. So it might only be as low as one to 2k per annum. And this is the real problem that most people are putting their eggs in the wrong baskets. What I'll do now is show you the pillars that are much more interesting. The assets which give incredible leverage have incredible power, and incredible ways for you to add value. But in order to do that, you have to think differently. So I'm now going to take you to what I call the entrepreneurial pillars. And pillar number four is property portfolio.

Speaker 3 20:21
What I mean by property portfolio is property you don't live in, that generates an income for you, usually from rental. Now, of course, there are many, many property strategies, we don't have time to go into all of those as at least a dozen strategies from rent to rent and buy to let and commercial HMOs different different types of tenant a whole range of different strategies. But I would guess probably the good things to say about property is that it's the asset class, which obviously the UK have fallen in love with. And it's probably the easiest to replicate. So you can create incredible leverage from the simple example of if you take 100,000 pounds worth of money. We talked about that. And the downsides, for example, and you wanted to use that money to put in cash, you get 100,000 in cash. If you put 100,000 in stocks, you get 100,000 in stocks. But if you put 100,000 pounds into property in a leveraged play, in other words, you use that money as a deposit, then you can control an asset worth 400,000. So you can get four to one leverage on your money. And that gives you incredible power. Because a 400,000 pound asset, giving you a rental income in this simple example, will massively increase the return on your investment, which obviously accelerates your wealth. And in fact, just this week, we had one of our earliest students has bought four properties within the last six months, using the power of leverage. And hundreds of our clients have used the HMO strategy in the student market, in the young professional market, in the protected tenant market, people who need care and those sorts of things, and generating on average 1000 pounds a month per property. So if they've got a target, let's say for security of 3000 pounds per month, three properties, we'll do that. Now that doesn't take a lifetime. And if their long term target is 10,000 pounds a month, which is the average we get for financial independence, just one HMO a year would generate that. So you can be financially independent for the rest of your life within 10 years, or quicker if you've got access to other forms of financial leverage. So absolutely without doubt, property is probably the most popular asset class, not just in the UK, outside of our community, but inside our community, where many people are working together to help each other find and develop and invest in more properties. Now, pillar number five, no secrets here guys, there's my favourite pillar really reflects my wealth dynamic. As a creative person. It's the pillar of business. And the reason I like business, unlike assets on this side, is the return on investment is completely unlimited. Because you're only limited to your own creativity. And you don't have to create a multimillion pound business, you can just begin to think like an entrepreneur. And there's a special kind of entrepreneur. Entrepreneurs, by the way, are always seeking to create value from for others. And how you create value is something we teach in the whole process of how to think like an entrepreneur. But just for the purposes of today, even if you're working in a job, you can become something called an intrapreneur. And we've definitely seen our clients create more value inside their companies and almost imagine they're playing for a team and creating value to get stock options, creating value to get a share of profit, or just creating additional value, even and trade off to get some spare time so they can use that time to use for their other wealth building activities. Now the other thing about businesses with the way technology has got faster and faster over the years has never been easier to be in business. You don't need huge amounts of money to create payments, delivery, all of these things because the internet can do everything for you. And we definitely have groups of our students Moving into areas like Amazon, creating specialist markets, getting additional side income, and being able to start on their journey of being a business owner as they transition often from being in a job trading time for money to being long term in business, creating a lifetime's worth of value. Now, the third area of business that I like in particular is something called a recurring income model. What I mean by that is, instead of being a business, where each month you start again, I focus and look and teach how to find or create businesses, where there's a lifetime's worth of value, from software sales, or from membership, or from ongoing contracts, or something that maintains a regular payment. Now, that's great for both sides, it's great because you have to focus on giving value to your client. But if that works, and then you've got a stickable proposition, or a sticky proposition, then you can get a long term value of income. And it's possible to create businesses, or multiple businesses, where you can have an incredible long term value. And if you can also then learn, again, as we teach how to work your business, so you don't have to work in it, then you can either sell that business for an incredible premium. Or you could just bank the royalty income that comes from that, with you not having to show up while the income continues to show up for you. So the sixth pillar in our tour of the wealth building assets, is known as IP. An IP is I'm sure you've guessed is intellectual property. Now, I'm not saying everybody's going to be a JK Rowling and write a best seller or a Noddy holder and write a song that pays him a royalty of 600 grand a year for the Christmas song that I hate. None of that, it's never been easier to create IP, just like it's never been easier to set up a business. Now, everybody really has IP soil in there. And if you can turn or think about whatever you've done in the past, the experience the value that you've created, and see how other people would want that value, then it's possible for you to create IP, and generate an ongoing income. for that. For example, one of our students, Andy, he used to work in the public sector in the police force, actually, because he made the gap, he made the transition. And so many of his fellow officers saw Him make that transition and were envious in some way, and wanted him to show how he did that. Through the combination of a Facebook group, a podcast, and then putting his own ideas of experience together in a very simple to run course, he was able to generate still further income, adding more and more to his wealth. So what's the final pillar? What's pillar number seven? I hear you ask? While it's a very fascinating one, because most of the other pillars you tend to do on your own, you tend to have your pension on your own, you invest on your own, you're in business, you make the decisions. So pillar number seven. Very interesting. So what does JV mean? It means joint ventures. So it means you can collaborate with others, you can have more fun, you can bring something to the table that somebody else wants, or they can bring something that you don't have, that they have, for example, those people who say to me, I've got an incredible idea, I know how to do incredible things, I've got no money. Well, if you've got a way to bring incredible value, the money will always follow. And joint ventures in essence, is about combining those things for multiple people to share in the value. And what's really exciting about the joint venture pillar is how people find their way to collaborate. We've got five of our members working together on a business venture, and they're in different countries, but bringing different ideas. We've got many of our clients who are investing their SAS pensions with others in property so that they're sharing in that value. There's just no limit to the creativity that can come from joint ventures, which is why it's probably my second favourite pillar. So let's do a quick summary. If you think about the way things are laid out here, the vast majority of the population that 95 per same build their wealth on the right hand side, where they have no control the return on investment, well, in some cases can be zero, but it's always single digit. There's virtually nothing that can be done. On this side.

Speaker 3 30:18
The assets on the left hand side, the assets, which are more entrepreneurial, can give incredible returns, we have clients who are generating income. So from HMOs of 12, to 15%, commercial property, commercial residential property in the 20s and 25 percents in business, the return can be infinite. In terms of IP, you can generate, again, like a business, infinite returns, and joint ventures while you can generate massive returns on knowledge, massive returns on enjoyment, and massive returns on your money. But the big value in understanding all of the assets is you can start to choose the assets that best work for you. And if you rely on just one or two assets, particularly if you look at pensions and investments, because they tend to be in the same place, stock market. So you can become a place or in a place of great danger. So the more you can build your wealth and pillars, multiple pillars, which is what I did for myself as I developed this system. And now as we teach it to others, and we see what they're doing. They're creating multiple streams of permanent income flowing into their life, faster, safer, more enjoyable than simply being on this side. And that's the beauty of understanding all of this. So you become independent, from what's happening to the stock market, independent from what's happening to government policy decisions, independent what's happening in the economy, you create your own personal economy. In a way it's impossible to do unless you understand all of these

Christian Rodwell 32:12
There you go. Now you know exactly what the seven different assets are that you can use to generate multiple streams of recurring income. And if you enjoyed listening to today's episode, and you'd like to download a free copy of Kevin's book, The Seven Pillars of Wealth, then head on over right now to wealth builders.co.uk forward slash book, and you can get your copy immediately. All right, Kevin, and I will be back Same time, same place next week. See ya.

Speaker 1 32:41
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside a wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk/membership right now for free access.