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Disclosure: This is not a means to solicit any of the securities mentioned nor does it recommend it for any person before they speak with a licensed professional investment advisor for their own suitability. Investing in Equities bears risk of capital loss. This is strictly the opinion of Jason Tillberg, President and founder of Tillberg Capital Management, Inc. and shall not be held responsible for investment loss from this writeup.
Building and Storing Wealth
What is Wealth?
I'd like to divide Wealth into two sets of things:
1. Stored Wealth 2. Income Producing Assets(Both to be defined further below)
Why Build Wealth? Without wealth, one cannot be in position to afford the basic necessities of life when either retired or unable to work due to either lack of opportunity or injury.
Without wealth, one cannot be able to make a down payment on a home purchase, start a business or achieve a life-long dream of your choice.
Without wealth, one cannot take part in life enhancing activities that may include but not limited to gardening, traveling, creating art, exercise, charity, etc.
It is one's individual responsibility to take ownership in one's own financial life via storing wealth so that one will not need the charity of society. Wealth, in essence, can be considered freedom; where as being indebted can be considered as slavery to your lenders.
How is Wealth Gained?
First and foremost, through the fruits of one's own labor wealth is gained. Living within one's means is a critical aspect of being able to gain wealth. Savings can become either "stored wealth" or become invested into "income producing assets."
As wealth is stored into an "income producing asset," the income from the asset can then be reinvested either into the same asset (I.E. Reinvestment of dividends by buying more shares of the stock) or used as income.
What else can wealth provide?
As one's asset column grows and the income generated off of the income producing assets increases, there will come a point when the income from the assets exceeds the income from one's labor. It is at that point, retirement may be a viable decision. Freedom from the 9-5 can be achieved. Choices of how one can spend his or her time are increased dramatically.
One's standard of living can be increased with:
A better quality of food.
A better quality of shelter.
A better quality of clothes.
An enhanced ability to have more self achievement.
Being happy and being around wonderful loving friends and family money can't buy.
Where can one store wealth and in what kind of assets can one receive income?
Stored Wealth
Just like the thrifty hard working ants had to store their corn for the winter, the thrifty hard working person needs to store wealth for non working times.
Wealth can be store in many ways that will fend off the ever growing awful debasement of paper currency. Regardless however, every asset has its risk.
One's home: Owning one's own home is the biggest most important asset of stored value. One should save up with the biggest down payment one can get and take on the shortest mortgage life one can afford to pay off as soon as possible.
Gold and Silver Bullion: Both carry an intrinsic value that shall always hold its buying power. We have gold because we can't trust governments so the old proverb goes. * Risk is can be stolen.
Food: How about a year's supply of canned and other non perishable foods.
Fine Art: A well known piece of art can be a store of value. * Risk is can be stolen or damaged and ability to readily turn into cash.
Farm Land: Unfarmed farmland can have value stored as it has the potential to be farmed and produce crops. * Risks may include access to water and general economic factors affecting the profit of farming.
House or Building but with no Tenants: Non income producing real estate can still store value as it has the potential to produce rental income. * Risk is there could still be expenses in holding such an asset like property taxes and insurance and finding a tenant when one decides to rent out.
Collectables: Baseball cards, Antiques, Dolls, Plates and other collectables that have value. * Risk is that there could become damaged or stolen.
A car with 100,000 miles left in its life: Storing value could be buying new car in full payment that has a long life ahead of it. * No risk
These are just some of the ideas for where to put funds to "store wealth."
Income Producing Assets
To beat the debasement of paper currency, the income producing assets need to both provide enough income but also have the ability to increase income along with the inflationary consequence of a debased currency. Again, each has its own risk.
Some income producing assets you can buy to provide income for living expenses or for reinvestment include but not limited to:
Real Estate: Buy property and rent it out for income. * Risks include having tenants that pay on time.
Savings account and CDs: These interest baring accounts provide interest that should at least pay a rate that is equal to or better than the rate of inflation. Low risk, but low return.
Bonds: A bond is debt to either a company or government agency. You get to be the lender who in retern receives the interest payment from the borrower until the bond matures. * Risk is the borrower may not be able to make payments and may default. Also, if interest rates were to increase, the value of ones bond would fall in price.
Stocks: Stocks offer one the ability to become part owner in the businss. When the business makes money, it may pay part of the earnings back to the shareholders as a Dividend. Dividends are the first way to make money with stocks. The other way to generate income is through selling covered calls. Through theappreciation of the share price, a capital gain may be made with the differance between the purchase price and the current market price. Over time, as the business grows and earns more money, the price per share may increase in value. This appreciation in share price can become substantial over time with the right stock.
This website puts a great effort into "Value Investing" to help the individual make intelligent stock investment decisions. * Many risks with stocks, so careful analysis or professional guidence must be taken.
Small business: Buying a stationary store or a franchise in a McDonald's can be an example of an asset that is for producing income for the owner. * Risk is the business losses money and fails.
There are your more common forms of assets for which to store your wealth and build your wealth through.
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