Go through your bank statements and identify what you make, and where your money goes each month. From there, identify where you can or should cut back as well as what you have to invest, The goal is to live on 50% or less of your income, no matter how little you think you make. This may mean that you need to move into a smaller house for a few years or drive an older car, but identify where you can cut back and make the changes.

2. Pay off debts

Identify what you can make on investments you are interested in and pay down debts that charge more interest than you can make. For example, if your car interest rate is at 2% but you can make 8%, invest the extra money instead of paying off your car. On the otherhand, if your credit card charges 15% and you can make 8%, pay off the credit card first as quickly as possible with all extra available cash..

3. Identify your risk tolerance

Typically your risk tolerance correlates with your age, but that is not always the case.. The older you are, the lower your risk tolerance becomes as you have less time to make up for losses. Higher risk investments include:private equity, stocks, and other investments not tied directly to assets where you really can lose everything. Lower risk investments are tied to asset management where you are investing in growth of value of the asset.

4. Find an investment and educate yourself

When starting out, it is important to find a source of education to learn (classes, mentor, associations, etc). Every professional athlete has several coaches, and so should you. Hiring a mentor or coach will shorten the learning curve and help avoid common mistakes to increase your return faster.. The more you learn, the better you will get at your chosen investment.

5. Adapt as needed

Markets change. It is important to understand the changes in the market and adapt accordingly. No one can predict market changes 100%, but the more you learn, the better you can adapt, fail fast, and panic sooner.

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Become the absolute best at what you do. Make sure you understand how your position plays into other areas of the business or other departments. Take necessary classes or get necessary certifications to be considered the master. Find ways to increase your marketability and increase your income.

Live on half or less than you make

This may require moving into a smaller house temporarily or getting an older car, but controlling your expenses for a short time is extremely important to developing cash/ savings to invest into passive streams of income.

Focus on delayed gratification

Don’t buy the purse yet, buy assets that will pay for 10 purses later. Find cheaper alternatives to luxuries for 10 years and you won’t have to blink when you want to buy them later.

Gain an understanding of leveraging assets

Gain an understanding of leveraging assets and the interest you are paying versus the investment income. If you can pay 4% on your house, do not pay it off. Make 12-20% interest on other investments and make 8-16% off the bank’s money. With this strategy you can buy more investments and ultimately have a great stream of cash flow off the bank’s money.

Plan your investments wisely

It is important to understand your risk vs reward and to always have safe passive income balanced by higher risk/reward investments. Never put all your eggs in one basket or one industry.

Level up your team

Level up your team. As you grow in wealth, you will need to upgrade your legal, financial planning and CPA teams. You want to always work with individuals that have experience at levels higher than you because that is where you are going.

Visit insurance regularly

Visit insurance regularly, at least once a year. This includes life insurance, replacements costs on your homeowner policies, and deductibles. Based on growth, these change and should be updated accordingly. Only you know what you need, so even the best insurance reps can’t/don’t just update these for you.

Estate planning

Make sure you have a trust set up and that you have a competent estate plan..This includes entity set up, entity ownership, wills, etc. This needs to be done at least annually to avoid probate and unnecessary taxes.

Continue to build streams of income

Continue to build streams of income. The average wealthy person has at least 7 sources of income. While you want these to go together and make sense, it is also wise to create entities in different industries so that when one industry struggles you maintain balance.

Plan your removal from day to day operations

Plan your removal from day to day operations so that you can enjoy life while still building wealth. You never want to be the smartest one in the room. If you don’t have a second hand that is more capable than you, you are failing your legacy and it will die with you. The best bosses are the ones that don’t have to be there everyday.

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Real estate investments typically provide a higher rate of return than many other conventional investments such as stocks and bonds. This means investors have potential to benefit from quick and long term financial gain. Real estate not only creates cash flow that you enjoy today, it also appreciates on average 5-10%/ year. The beautiful thing about that is the fact that your liability or loans are being paid down during that time also increasing your return.

2. Long-Term Appreciation and Equity Building

Property values can appreciate over time, making for consistent long-term returns and building equity. With this you can easily leverage your investment to buy more investments only compounding your return and equity growth.

3.Tax Deductions

Investors are allowed to take tax deductions against their rental income, such as property management costs, repair costs, mortgage interest and other costs associated with rental property. This can reduce taxable income and result in saving money at tax time. There is also a deduction for depreciation that dramatically affects your taxes owed and helps keep more of your money in your pocket than other types of investments. If you really want to save on taxes, you can do cost segregation on real estate and save even more tax money.

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