This is the second in a series of articles revealing the Myths that Keep Your Broke. In these articles, I will uncover the many myths that too many people believe. These myths can prevent you from creating wealth and financial freedom. Let’s start destroying them.

Myth #3: You Have Plenty of Time

When I was young I thought I had plenty of time to plan for retirement. The myth that you have plenty of time to plan is deceptive. And the word retire was the word that was used to talk about a time when someone could choose not to work and still have enough money coming in to support their standard of living. You DO NOT have plenty of time; you need to start now, today and allow compound interest to work in your favor.

As an aside, I prefer to avoid using the word “retire”. On a farm when a cow can no longer produce milk they put it out to pasture to die. The term for that is to retire the cow. Do you like the idea of becoming useless and being put aside to die?

Instead I prefer to talk about having complete financial choice™; choosing to work, or not work; choosing to travel or not travel; choosing to volunteer or not volunteer. How does that sound to you?

Back to the topic for today; time.

You have two choices when it comes to creating wealth:

1. Long periods of time, taking little risk with small amounts of money.

2. Short period of time with high risk, and possibly small amounts of money.

First I have to give you my definition of wealth: When you have enough passive income to fully support your standard of living. That includes home living expenses, personal expenses, travel and/or however you choose to live your life.

Choice 1: Albert Einstein is quoted as saying compound interest was the eighth wonder of the world. As an example; if you earned 12% on $300 per month for 10 years, you would have invested $36,000 and it would grow to $69,000, or almost double.

But in 20 years you would have invested $72,000 that would have grown to $297,000, or more than four times your investment.

But here is the magic; in 30 years you would have invested only $108,000, and you would have a whopping $1,048,500, almost TEN times what you invested!

And while you were only putting in $300 per month, the income from your investments could pay you $10,485 per month at 12%, without ever reducing your principal. Let’s say you were insecure about continuing to earn 12%, and instead moved it to investments that only paid 6%, you would still have a monthly income of $5,242, or 17 times more than you were investing.

My son is a Chartered Financial Analyst (CFA) and Certified Financial Planner® (CFP), and he said only a 3.5-4% withdrawal rate is appropriate. But my lowest return on investments is 6.5%. Obviously I have a difference of opinion with my son.

Choice 2: Because I found myself broke at age 50, time was not going to work in my favor unless I took more risks with the small amount of money I was able to save. That is what I did by investing everything I had saved in three years ($18,000) into a multi-unit property with two others. We controlled the investment and in six years we sold the property for a substantial profit. My $18,000 investment grew to $130,000, which is about a 36% compounded annual return.

And during those six years I borrowed more money to make down payments on more multi-unit properties, and by the seventh year I was a multi-millionaire. So, if you are willing to take calculated risks, have little time and little money, you can still create wealth. It is never too late.

If you do not know where to get higher returns than the bank pays, just send an email with your questions or concerns, or buy a copy of my Wealth On Any Income book.

Myth #4: Who You Hang Around With Doesn’t Matter

You may have some friends from when you were very young, or from high school, or from college, and you really enjoy hanging with them. Once per month I actually have lunch with 8 – 18 friends with whom I went to elementary school over 50 years ago.

However, those are not the folks that are responsible for supporting me to create wealth. As Jim Rohn said, “You are the average of the five people you spend the most time with.” And this applies to your income as well as other areas.

Who you hang around with does matter.

If you hang around people who earn a minimum wage, it is likely your income will be similar. If you want your income to grow, hang around people who earn much, much more than you do. Their ideas and their attitudes about money will rub off onto you.

If you earn $100 per hour, hang around with people who earn $400-500 per hour. Or better yet, do not hang around with people who have to sell their time for money. Hang around people who make money based on what they create or the results they produce.

I was not willing to hang around jerks, but with people who had the values I admire and were successful. Many years ago I realized that if I wanted to create wealth I needed to hang around people who earned far more than me and who had a net worth far larger than mine. Guess what? How they think and their attitudes rubbed off on me.

Where before where I saw blocks I started to see opportunities. I looked at how to effectively grow my business and how to create large dollar contracts and there were more changes as well. Who you hang around with is one of your keys to open the door to more wealth.

As an example, I wanted to earn money from investments, and not from work. So I started to hang around with people who had large investment portfolios and we spoke about what they did, who was doing things for them, where they saw the growth opportunities and so on. In ONE MONTH recently our portfolio grew by $524,020. I couldn’t earn that much money if I worked 40 hours per week for three and a half years at $100 per hour.

If you hang around people who earn hundreds of thousands of dollars per year, it is likely over time your income will grow to that level. It STARTS with who you hang around with, and not the other way around. Look at who your friends are and how much time you spend with them.

I am NOT saying dump your friends. I am suggesting you add to your circle of friends those people who are where you want to be; people who share your values and have achieved what you want to achieve; people who are what you want to be and have what you want to have.

Who would be three to five people you would want to spend more time with that you can invite to coffee?

To Your Prosperity,

Rennie

Author's Bio: 

Often in the media and in a recent Ted Talk, Rennie Gabriel supports individuals and business owners to create work as a choice, instead of a requirement, just as he did for himself. Rennie had gone broke twice (two divorces), but using the same concepts published in his book, Rennie created more wealth in each recovery than what he had prior.

As a highly rated instructor at the University of California in Los Angeles (UCLA), Rennie uses his award-winning, best-selling book, Wealth On Any Income, to teach effective money skills from both the emotional/psychological aspects as well as the practical components. His book has been translated into five languages. Rennie is a retired Chartered Life Underwriter (CLU) and Certified Financial Planner® (CFP®) and often adds BFD to his credentials.

His extensive knowledge of real estate and finance is useful not only to those who own or invest in real estate but to anyone striving for a better life by trying to achieve financial freedom.

His clients range from financial professionals, like CPAs, stock brokers, and financial planning firms, to entrepreneurs in the transformational space (coaches, authors, and speakers). He also works with large organizations like the FBI, American National Insurance and Toyota Motors.

After 40 successful years in financial services, Rennie now works to donate 100% of the profits from his speaking fees, wealth programs, books and business coaching to charities, the primary one is www.ShelterToSoldier.org where dogs are rescued, trained and donated as service animals for soldiers with PTSD and TBI (Post Traumatic Stress Disorder and Traumatic Brain Injuries)