Salena: Thank you, James. Great to be back.
James: Now, you hear people talking about the wealth game or the game of wealth. And you told me recently that’s actually incorrect. And I’m curious to know, why is this not about the game of wealth when we’re talking about creating wealth for ourselves, because you’ve got a different perspective on this.
Salena: I think the thing that I’ve learnt over the last 25 or so years is that there’s actually three parts or three different games that you need to have when you think about building wealth. If you’re interested in creating financial freedom well before retirement age, and to be frank, most entrepreneurs are, and they, they maybe don’t understand those three parts. It takes longer which is, you know, really the ultimate price.
So the three parts to the game, from my perspective, and if you can wrap your head around this is, part one of the game is absolutely: build capital. So if you can set aside some of your premium income and dividends, use leverage from banks, buy capital assets that will grow over time, that is totally part one of the game.
The second part of the game though is, you know, we’ve talked about before, like traditional assets are pretty crap for cash flow. And part two of the game is really to go, Well, look, I’ve amassed a good amount of capital, how about now I focus on the cash flow and change the trajectory? And so part two of the game is, how do I tap into alternative investments which will maybe 5X my cash flow? Because if you can do that, then suddenly, you know, financial freedom becomes significantly closer.
And then the third part of the game which is really the fun part is, the tweaking part of the game. It’s, now that I’ve changed my trajectory and I’ve got the cash flow I need to live independently whether my business runs or not, how do I convert that into annuities? And so the third part of the game is structuring for annuities. And I think, if you can get your head around those three distinct parts of the game, then this idea of minimum effective capital becomes relevant. And then the conversion piece and then the the annuities piece becomes much, much easier.
James: I mean, they don’t really teach this at school. And I imagine a lot of people get stuck on that very first one, they go and buy a large family home and get a mortgage and then that’s it. There’s no cash flow coming from them. It’s probably not even tax-deductible in some markets.
Stage two, switching the asset type, that’s a really hot tip there. Getting it focused on income, and you say that it really increases the rate of return. And the third part, I mean, that sounds like a dream. If you look at the stats, a lot of people just don’t have enough money to retire and they probably plan on getting government benefits. But I guess what I think about is, maybe there won’t be that many government benefits by the time people reach that age. It’s certainly something you wouldn’t want to rely on.
So if we did want to understand more about this, can we get in touch with you over at InkosiWealth.com?
Salena: Absolutely! Love to hear from anyone who’s interested in playing the next part of the game.
James: Thank you, Salena.
Want help building your wealth? Get in touch with Salena at inkosiwealth.com
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