Your Financial Plan: A Bucket With Holes?

You can fill a bucket with holes in it one of two ways. You can add more water to it, faster than it loses it, or you can plug the holes, add the water, and watch it overflow. Which does your financial advisor have you employing in your financial plan?

What would you consider to be the biggest culprit to not creating wealth?

Many would have 3 words in mind, rate of return, but is it?

NO!

The biggest culprits to not creating wealth come in the form of the following:

· Debt

· Interest

· Taxes

· Opportunity Cost

The amount of money that flows away from your circle of wealth is immensely larger than the amount you will ever flow into it by focusing on rate of return.

The average American spends 34 cents of every dollar on interest alone, another undetermined, yet substantial amount on taxes, and saves less than 1. But generously we will take an unaverage American and say he saves 10 cents on the dollar. If he makes 100,000 per year, invests 10,000 and is able to come out with 8% (not calculating taxes), he will have grown an additional 800 dollars. Great, right? Not so much, he is still losing too much to ever counter the loss with those gains, he has a bucket with holes in it. So what does he do? Does he put more water in? or does he fix the holes first. Is your financial advisor telling you to keep dumping water in? If our unaverage American were able to save merely 1% of his income he would have increased his wealth much more than the rate of return produced, and he took no risk to do so. It would be the easiest money he ever made. What if he could recover 2%, or 3%. How much have we affected his financial situation?

Patching the holes is the part most advisors miss. By using different techniques and strategies to patch these holes, one could learn how to redirect all the interest back to his circle of wealth, save thousands on taxes, put himself in control, absolutely eliminate risk, and leave a legacy to pass on to future generations.

Filling a bucket with no holes in it means that if we continue to pour water in, we will need a lot of buckets. Becoming wealthy is not a product, and is not based on rate of return, but it is a process, and it begins with understanding that being in control, and paying yourself instead of others, will be the most powerful means of creating wealth.