May 12th, 2010
Most people believe that by concentrating on their careers and by increasing their income, they will fix the problem of not having enough money. So they are constantly looking at ways of advancing their careers and qualifications. They are working harder than ever on getting promoted, or looking for the next job with more pay.
The truth is that for most, focusing on your careers and the income from your job is not necessarily making you any wealthier because you are spending your gains on depreciating luxuries which keeps you prisoners of the middle class. In addition, Income tax, inflation and interest payments on your money are seriously handicapping your ability to create wealth from your income. You are focusing your attention and energy in the wrong place. Making a million in salary income (whether that be in a month, a year, or five years) and spending the same million in the same period, doesn’t make sense. You are just a consumer.
So, where should we be focusing our attention if we want to improve our financial wellbeing? Well the secret is to take about 5 to 10 percent of what we are making from our monthly salaries and convert this investment amount into buying appreciating assets. The kind of appreciating assets I am talking about are assets that pay you a constant, recurring and exponential income. Buying a two bedroom apartment at a bargain price in a good area that is experiencing excellent growth is an example of a great appreciating asset. My aim is to get a 90% mortgage on this property and get a good tenant to pay the mortgage payments.
And no I don’t live in a fools paradise or in fantasy land – there are thousands who are successfully achieving all of the above. If you want further information please contact me at clive@7yearwealthplan.com
This entry was posted at May 12th, 2010 by Clive Bydawell, click here to read the full post.
May 6th, 2010
Over the next few months I will be offering excerpts from the 7 Year Wealth Plan™ book (ISBN 978-0-620-43843-8). The book is almost ready to go to print.
The whole 7 Year Wealth Plan philosophy can be summed up in these 7 principles;
- Work towards a balanced lifestyle – Have the best of both worlds
- Learn financial wisdom – continually increase your financial knowledge
- Take control of what happens to your money – take responsibility for your financial decisions – turn your money from master to slave
- Cash flow is king – reduce debt, increase income and invest the difference (aim for 10% of income)
- Stay focussed – buy and finance assets not liabilities
- Protect your wealth – build a wealth fortress
- Have a charitable and grateful attitude – give something back
I will expand on these 7 principles with illustrations and examples in the coming weeks. I look forward to your comments as we go through these important wealth principles.
You are welcome to use all the material in the 7 Year Wealth Plan™ book as long as you give credit to us. In your credit line, please will you use the full 7 Year Wealth Plan URL – www.7yearwealthplan.com
Regards Clive Bydawell
This entry was posted at May 6th, 2010 by Clive Bydawell, click here to read the full post.
April 27th, 2010
There are two more compelling reasons why you should consider property to balance your investment portfolios:
This investment class attracts a tenant who’s rent covers 85% to 100% of the initial running costs of your auction property investment (mortgage repayments, levies, maintenance costs and property management fees). What this means is the tenant pays for your investment and will overtime, pay you an escalating rental income.
Some do not invest in property because they are afraid of renting to bad tenants. Bad news travels fast and we always hear about the 10 investors who have had bad experiences renting their properties, we rarely hear about the other 90 who have done well through their property investments. Remember, there are no risk free investments. We are more that willing to share with you the methods used by successful property investors to radically reduce property investment risk.
The second compelling reason is that property has always been a more tax friendly investment class, especially if your property investments are placed in the correct property trust structure. Property bought in a property trust which is setup correctly can save the investor considerably. This intricate information is best explained by our associate trust attorney in person.
There are two more compelling reasons why you should consider property to balance your investment portfolios:
This investment class attracts a tenant who’s rent covers 85% to 100% of the initial running costs of your auction property investment (mortgage repayments, levies, maintenance costs and property management fees). What this means is the tenant pays for your investment and will overtime, pay you an escalating rental income.
Some do not invest in property because they are afraid of renting to bad tenants. Bad news travels fast and we always hear about the 10 investors who have had bad experiences renting their properties, we rarely hear about the other 90 who have done well through their property investments. Remember, there are no risk free investments.
The second compelling reason is that property has always been a more tax friendly investment class, especially if your property investments are placed in the correct property trust structure. Property bought in a property trust which is setup correctly can save the investor considerably.
For more information email me – clive@ifinplan.com
This entry was posted at April 27th, 2010 by Clive Bydawell, click here to read the full post.
April 21st, 2010
Now, what happens if I buy an investment property below its real value?
If I purchase a property with an intrinsic market value of R500,000 for R400,000 at an auction. I pay the deposit of R40,000 (10% of the purchase price) plus auction commission and costs of R35,000 for a total investment of R75,000. My gain on this auction property is R150,000 (the R100,000 difference between the market price of R500,000 and the purchase price of R400,000 plus the 10% growth on the property from R500,000 to R550,000). The R150,000 return on the R75,000 investment is 100%.
Now some will argue that the property market is not performing at 10% growth, and currently they are correct. Yet even at 5% growth, a property purchased below its market value still performs better that other investment classes because of the equity I gain through the discounted price and the leverage I get through a 90% bank mortgage.
While some collective investment schemes boast 30%, 40% and sometimes 50% per annum returns, an educated and experienced property investor can (and do) achieve between 100% to 200% returns on their residential property investments.
Part 3 (final) next week.
This entry was posted at April 21st, 2010 by Clive Bydawell, click here to read the full post.
April 14th, 2010
When calculating any Return on Investment (ROI), one must compare apples with apples. My investment of R50,000 buys me R50,000 shares whereas the same R50,000 investment can buy me a residential property valued at R500,000 with a 90% bank mortgage. For the sake of this discussion we are going to presuppose that the shares will grow by 20% and the property by 10% during a 12 month period. The return on the money I actually invest is remarkable between the two scenarios. Allow me to explain:
If I purchase shares through a collective investment scheme for R50,000 and these shares grow by 20%, the R50,000 investment makes me R10,000.
Compare the same R50,000 I invest in property valued at R500,000
which grows by 10% to R550,000. This gain is R50,000. R40,000 more
than the shares.
When calculating any Return on Investment (ROI), one must compare apples with apples. My investment of R50,000 buys me R50,000 shares whereas the same R50,000 investment can buy me a residential property valued at R500,000 with a 90% bank mortgage. For the sake of this discussion we are going to presuppose that the shares will grow by 20% and the property by 10% during the same 12 month period. The return on the money I actually invest is remarkable between the two scenarios. Allow me to explain:
If I purchase shares through a collective investment scheme for R50,000 and these shares grow by 20%, the R50,000 investment makes me R10,000. Compare the same R50,000 I invest in property valued at R500,000 which grows by 10% to R550,000. This gain is R50,000. R40,000 more than the shares.
Part 2 next week.
This entry was posted at April 14th, 2010 by Clive Bydawell, click here to read the full post.
April 7th, 2010
There are about 9 Million active income earners in South Africa and the average income of all of these income earners is a monthly income of R4,484 (Source BMR 2009). So when Stats SA says that the CPI is currently at 5.7% then they are right – providing that…you are the average income earner, that is – you earn R4,484 a month. Inflation is a lot higher for those who earn more than R 4,484 a month.
In 1972, the Argus newspaper cost 5 cents and now costs R4.80. This works out to be a 13.3% year-on-year inflation every year since 1972. In 1972 Rainbow Chicken cost 50 cents per kilogram and now costs R24.99. This represents 11.2% year-on-year inflation. A BMW 2000 sedan cost the total sum of R3,595 in 1972 and now a BMW 320i costs R315,500 which works out to be 12.9% year-on-year inflation.
Two weeks ago the Times newspaper’s front page article spoke at length about how the cost of living is growing at an alarming rate, thanks to a government that refuses to correctly educate the public properly on financial matters. Now Eskom, and virtually every business and organisation plays catch up with the true rate of inflation.
If your cost of living is increasing year-on-year at 12% and your income and assets are growing at 8% then I am sorry to tell you, but every 18 years your wealth is being halved. You may want to try the 7 Year Wealth Plan™.
This entry was posted at April 7th, 2010 by Clive Bydawell, click here to read the full post.
April 1st, 2010
Isn’t it amazing! When we did badly in a subject or two at school, our parents and teachers told us to put more time and effort into our failing subjects. Adults taught us to concentrate our time and energy on the areas of our education that we were not interested in. In fact, instead of “focusing” on our strengths, we were taught to “focus” on
read more »
This entry was posted at April 1st, 2010 by Clive Bydawell, click here to read the full post.
March 24th, 2010
Last week we discussed the negative impact of continuously purchasing liabilities on our ability to build long-lasting wealth. The opposite is true for appreciating assets, especially assets that don’t require a lot of our time or maintenance.
Buying a small two bedroom flat or apartment in a well established area, using the bank to finance 90% of the purchase and getting a great tenant to pay 90% of the monthly bond and levies while watching the property double in value every six years make a whole lot of sense to me.
If you want to know where to buy great properties like these, then email me and I will show you – clive@ifinplan.com
This entry was posted at March 24th, 2010 by Clive Bydawell, click here to read the full post.
March 16th, 2010
By continually buying depreciating assets (called liabilities) like cars and expensive electronic goods you undermine your propensity to build long-lasting wealth. So what do you do when you have to buy a car and you have to finance this car?
Don’t buy the most expensive luxury car you can afford – rather
read more »
This entry was posted at March 16th, 2010 by Clive Bydawell, click here to read the full post.
March 10th, 2010
The best way to generate long term wealth is to continually focus your energy on buying appreciating assets with your hard earned income. Period.
This entry was posted at March 10th, 2010 by Clive Bydawell, click here to read the full post.
