Creating Wealth – How To Become a True Investor

+Hans Schoff wrote:

Along 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

Originally posted 2010-12-15 23:30:09.

Original post can be found here: “Creating Wealth – How To Become a True Investor