creating wealth

Creating Wealth – How To Become a True Investor

creating wealthAlong the lines of creating wealth, what qualifies someone as a true investor?  Lots of people like to call themselves investors, yet the truth is these are the same people who had the largest losses over the last few years in the stock market and housing busts.  Are they really investors?  If not, then what is it that really distinguishes between someone who calls themself an investor and a true investor?

Raising money.

Creating wealth – or at least the desire to create wealth – by giving someone else your money to invest (ie, putting money into mutual funds via your 401k) doesn’t make you a true investor.  You may be investing but that does not qualify you as an investor.  On the contrary, whoever it is you are investing money with, whoever is raising the capital, that person is the true investor! It is the act of raising money for an investment that makes one a true investor.

For creating wealth, the distinction here is important.  The investor, the person actually raising the money, is the one who receives the tax breaks and other benefits, whereas the one investing with the investor has no control over their money and ends up giving away their wealth due to taxes and inflation.

It was back in 1943 when employees lost their tax breaks when the tax code was introduced (employees were the only ones to lose their tax breaks).  Then in 1986, small business owners and the self-employed lost the majority of their tax breaks (leaving only big business – companies with 500 or more – and true investors the lion’s share of the tax breaks).  Big businesses and Investors never lost their tax breaks which is why they’ve been able to continue creating wealth, growing richer and richer while the middle class and lower class continue to get poorer and poorer (again, due to taxes and inflation, among other things).

So how can you gain the tax benefits for creating wealth and other advantages of big businesses and true investors?

In a nutshell, creating wealth is about being less greedy and selfish and instead being more generous and giving more.

Here’s what I mean: the more jobs you’re able to create, the more housing you’re able to provide, the more resources you’re able to develop and bring to market, the more products you’re able to offer, the more people you’re able to serve and lives you can affect, the more you will stimulate the economy and the bigger a person (and/or business or investor) you have to become.

On the other hand, those that are too greedy and selfish – those that continue to demand more and take more and think only of themselves and their family while contributing less and less – will continue to have to pay more and be penalized more.  If you’re generous, the tax advantages will shift to your side, but you have to be smart.

This is the reason for our current financial crisis: too much greed (liar loans, bad appraisals, Bernie Madoff scandal, etc) and not enough generosity.  One of the most basic rules of the Rich is that the Rich don’t work for money.  When you work for money – whether in the form of an hourly wage or salary as an employee or by the job or project as a self-employed or small business owner), the Fed steals your money anyway through taxes, inflation and retirement plans.  (That’s why it’s gone.)  If you don’t have basic skills of money (to develop assets that produce income and cash flow, thereby creating wealth), then you have to work for money and again the Fed will take it from you through taxes, inflation and your retirement plan, ie, 401k and mutual funds.  So if you want to get richer you have to be more generous.  Help more people so they can become better off and the better off you’ll become.

For example: someone who goes out and buys a rental home often times believes that simple act qualifies them as an investor.  They believe that one single property –  that one unit in and of itself – qualifies them as an investor.   However, that one unit does not meet the above definition of a true investor, of being generous.  You may have provided housing for one family, but you are the one who really benefits from that having not created many (if any) additional jobs so it fits into more of the selfish or greedy range (but hey, you’ve got to start somewhere – just realize you need to scale-up to really make a difference and really begin creating wealth!)

The truth is that once you’re truly being generous and providing housing for many, many different families – once you have acquired around 1,000 units for example – ensuring you have acquired the skills, knowledge and experience as well that goes with having that many units – then you become  a true investor.

Again, you are rewarded for being generous and providing more housing which impacts others more than it does you, requiring demand for more jobs to service those units, provide utilities, landscape them, make repairs, manage the bills and rental income, lease vacant units, etc.  As a reward for your generosity, substantial tax breaks and better debt financing options become available to you as well.  So as you can see, it really does pay to be generous.

To learn more about how you can begin creating wealth by being more generous and providing more for more people, visit the following site now and take the first step today: Creating Wealth

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24 Comments

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  • Nicole@muranoplace says:

    Very informative and interesting. These really is a timely post because some are finding it hard to raise money. Thanks for sharing..

  • unknown says:

    Creating money require us to curb the expenditure and the start investing the money saved form the taxes.

  • That is a really GREAT point: “being less greedy and selfish and instead being more generous and giving more.” I think successful business and investing should be about mutually beneficial business relationships, not only a “you scratch my back and I’ll scratch yours” mentality but also about providing jobs for other. Good article.

    • Karen, I’m a big believer in the power of attraction, that like attracts like. Success begets success, wealth begets more wealth, etc. The more you provide the more that will be provided to you. I’ve witnessed this phenomenon in all aspects of my life and it all starts with a mindset. Thanks again for your great comments!

  • crescele says:

    Thank you for providing some excellent tips in investing. This will surely help future investors out there to make sound decisions and judgments. Thank you for posting this article and keep it up.

  • Joanne Massey-Dean says:

    I agree 100% with you! I have been living by this thought of giving to recieve and positive things are starting to happen in my life. I give because of who I am, not to gain monetarily from it, but that is what happens. Thank-you.

  • One should try to maintain the wealth but not become obsessive with the wealth that just stop spending it this will become a sign of misery use the money well Is the main thing.

    • There is more to life than money, and that’s what’s great about creating wealth. When you have true wealth – where you no longer have to work for money – you can spend your time as you see fit, without having to constantly think or worry or obsess about money.

  • Joe Lund says:

    Very well said. Do you think the government has something to do with it? I think the government can control tax breaks. If they really care about increasing the economic status of those less fortunate, they should do something about tax break issues. However, the solution of that issue also depends on how people will take an action for it to be solved.

    • Hey Joe, check out my article on Creating Wealth 102 – The Other Golden Rule. Basically though, politicians are most concerned with their own unemployment rate, in other words, they are most concerned in doing or saying what they need to in order to remain in office. Because if they get voted out, they feel they are powerless to do anything. But really it’s the rich, the bankers and super wealthy who run the system. They are in control which is why we have a non-federal Federal Reserve without any kind of reserve. Why is it necessary for the US Treasury to pay interest to someone else to create our money for us? Another reason why the rich get richer and the poor get poorer – because the rich are in control, the system was designed that way. So you can fight the system or simply join the rich and be on the winning side… (long reply there, kind of went on a rant, lol – hope that helps though!) – Hans

  • ceejay says:

    It is still be difficult to convince people that it pays to be generous, Hans, but your post can make a strong case for it. When they said “Money Makes the World Go Around”, it means money being spent to generate more money. It works a lot like karma. Your expense should not end after the purchase, it should allow for several to benefit from your expense so they have money to spend themselves. One of the reasons why the global economy is suffering is because people are afraid to spend. The true investors are those who take the biggest risks, and reap the biggest rewards.

  • Linda says:

    I agree about the misconception towards rich people. Generosity is usually the character I observe on them. They give so much yet money doesn’t seem to run out. I think that when rich people give they have already calculated the return. I also admire them since they know how to let money work for them instead of them working for money. Unlike most who are trap, those whose hard earned money are enough to pay numerous bills.

  • Loren says:

    Hi Hans,

    I agree there is a big difference by being an investor (dabbling in investing; greediness; self-serving) and a true investor who has done all the necessary due diligence and research to get the results they are aiming for – raising capital. Practicing financial smarts and generosity as you say, really pays off as a true investor with integrity.

  • Inam really impressed by the point, “creating wealth is about being less greedy and selfish and instead being more generous and giving more”. Thanks for sharing this interesting read.

  • Yes, “creating wealth is about being less greedy and selfish and instead being more generous and giving more” is quite contrary to most people’s way of thinking, then again it may also be why most people are not wealthy… Great comment Pearly

  • Pearly Quah says:

    Hi Hans,

    I love this phrase : creating wealth is about being less greedy and selfish and instead being more generous and giving more.

    There are two things here which I would like to share my opinion with regards to the above mentioned.

    A) The person who is able do all these in one goal is the housing developer. They are capable to offer job opportunities, help investor to create more wealth, help the bank to get more business, help to increase the sales of building materials and etc etc…this will definitely strengthen the country economy.

    B) For those who are not in the position to be in development business, it is still possible for them to make it if they are smart enough to just follow the developer and sub some of the work, they are also able to help improve the economy together 🙂 because if there is work and if no one wants to do the job then it can be an issue affecting development project..that’s when job opportunity will have to open up to foreign labors. The more of this issue is not addressed, the more our own currency will go out from the country.

    So, with this I thank you for another excellent article on wealth creation…..I will have to agree not to think of ourselves and family only when creating wealth. The more opportunities we can provide to more people, most things can be taken care of 🙂 The more the merrier is the phrase here I love to use but not the more the less share we will get.. in this particular mention 🙂

    Thanks again, Hans 🙂

    Cheers
    Pearly

    Cheers 🙂
    Pearly

    • Yes, “creating wealth is about being less greedy and selfish and instead being more generous and giving more” is quite contrary to most people’s way of thinking, then again it may also be why most people are not wealthy… Great comment Pearly

  • Hans,
    What a valuable perspective. I have heard it said that the more people you help, the more you will receive yourself, but I have not really thought of this as investing. Thanks for sharing some important information about wealth building.
    Erica

    • Hans Schoff says:

      Erica, funny isn’t it? We are taught through school and conditioned through the media that “the rich are greedy” yet really, it is the rich who invest into the economy by providing housing, creating jobs and the like to be able to provide or benefit many more than just themselves. It is their act of being generous and giving or providing more to more people that in turn makes them richer. Again, the mis-conception is what keeps most poor people poor (thinking they need to be greedy and selfish to get rich, so in in turn they stay poor) and enables the rich to get richer (someone must provide and create this housing, jobs, investment vehicles, etc)! Thanks Erica for pulling out this key point!