Tag: Wealth

How Wider Society Can Learn From the Failed European Super League Plans

This week, the world learned that the greedy owners of the world’s biggest football clubs banded together to propose a non-competitive, self-serving, breakaway league called the European Super League.

Instantly, the media were outraged, the fans were outraged, the governing bodies of the sport were outraged, politicians were outraged, Royal family members were outraged. Later, football managers and players, including those of the clubs that had banded together, spoke out about their opposition to this new competition. Two days after the announcement, fans took to the streets to protest in front of the stadiums, delaying the team buses from arriving to start their game.

Shortly after, the greedy owners began to fold under the pressure of the opposition, and their plans have been all but scrapped. The figures involved in these devious plans have shown their hand and are now being driven away from the very clubs that they own.

So what can we take away from this?

Firstly, that a lot of rich people are self-serving and greedy. We live in a world where the biggest companies pay next to no tax to countries that they operate in. They feel invincible because they know that the public will be in uproar if they can’t log into Facebook or if they couldn’t buy the newest iPhone because of these companies’ tax avoidance. We all need to be aware of this, and we need to recognize when these companies are no longer helping the societies they claim to serve.

The second takeaway is how quickly change can occur when multiple parties unite with a common cause. The collective love of football and their biggest institutions (and conversely the hate of their owners) meant that the European Super League plans were scrapped just two days after being announced. Meanwhile in the wider world, there is huge wealth inequality, poverty, multiple kinds of discrimination, refugee crises, and many other issues in our societies. What would happen if we could unite as passionately against some of these issues too? Would it be as simple as this to create rapid change?

The real downfall of the European Super League is how drastic the proposed changes were. Human beings are all naturally resistant to change, and find comfort in the way things already are. In contrast, things like the increasing wealth gap slowly creep up on us, so the effects don’t feel quite as abrupt. This could be another reason why these societal issues are such difficult problems to tackle.

Overall, we can take solace in the fact that ordinary people can force the oligarchs of this world to change their decisions, but we need the help of the other parties too. That is, members of the media, royalty, politicians, charities, unions, and governing bodies.

The World Owes You Nothing

The problem when we get something, is that we tend to assume that the world now owes it to us. This can apply to houses, cars, jobs, friends, partners, status and wealth. When we achieve or acquire these things, we start to get comfortable and start to take them for granted. We feel we deserve these things.

But in reality, the world owes you nothing.

Firstly, complacency can take away your job and relationships, because you stopped providing the same value as you did at the beginning. Or, causes outside your control can occur – your car could get stolen, a natural disaster could destroy your home, deaths of loved ones, someone tries to shatter your reputation, market forces turn your investments sour.

Understand that all the beautiful things you may have right at this moment will not be here forever. Do what you can to make important people feel loved. But also recognize that we can decide to loosen our attachment to things, so that if they desert us we can be grateful that we were lucky enough to have them in the first place.

Working Hard Isn’t As Important As Knowing What to Work On

Most of us have been taught the importance of hard work – through our teachers, parents, mentors, and bosses. Hard work of course can lead to success and achievement.

But if you’re going to work hard, you have to know that you’re working on the right thing.

After all, is it really success if you have achieved something you weren’t interested in to begin with?

If you want to get rich you have to know what to do, who to do it with, and when to do it. Working hard matters, but hard work alone isn’t going to get you anywhere. You could work hard at being a laborer or as a cleaner but you’re not going to get rich.

On the other hand, you may find some people working in certain industries or in certain roles who are very rich, but don’t work hard. They tend to get paid for their judgement and decision-making rather than their physical output.

Before you get your head down and start working without thinking about it, think long-term. Am I doing the right job in the right industry? Not just to get rich, but does it interest me? Does it fulfill me? Do I like who I work with? Can I see myself here in the long-term?

The Government is Doctoring Inflation Rates To Secretly Confiscate Your Wealth

Inflation is defined as the rate of which the price of goods and services increase.

If you were to imagine the cost for a can of drink at the vending machine, petrol at the pump, housing or bread, the prices would have been much lower when you were growing up than they are now. That’s inflation in action.

If our wages don’t keep up with inflation, then our money doesn’t go as far and the standard of living falls.

So what is the current inflation rate? As of January 2021, the government quotes it at 0.7%. Compared to the 1970s where there was rampant inflation, this figure is historically low. Losing 0.7% of the value of your cash savings each year is a minor nuisance at best, and if your interest rate in your savings account matches that, then you wouldn’t be losing any value in your money in real terms at all. But there’s a twist in the tale.

What if the government’s figure of 0.7% didn’t actually match up to what’s really going on with prices in the country? What if real inflation was closer to 10%? After all, the US and UK governments have been inventing trillions of dollars of money in recent times in a process called quantitative easing, which is known to cause inflation.

In 1996, governments in the USA and UK decided to change the way that inflation rates would be calculated. They now use certain tricks such as substitution (using the price of the cheapest available type of product in the category they are calculating), geometric weighting (if they find something that has gone up a lot in price such as healthcare or property, they will assign an inappropriately low percentage of the calculation), and hedonic adjustment (reducing the price of an item like televisions because the item is higher quality than it was the year before). Hidden inflation is becoming more common too, such as when companies give you less of a product like Dairy Milk or Walker’s crisps for the same price, hoping that you won’t notice.

Even if you don’t understand this last paragraph fully, it basically means that the government is tweaking around figures in a formula to get a desired result, instead of doing it fairly. But why would they want inflation rates to seem lower than they actually are?

Firstly, because GDP numbers are inflation-adjusted. If governments are adjusting for inflation by their own fake figures instead of the real ones, it makes it look like the economy is growing even if the economies are actually going backwards. Put another way, because real inflation is at least 7% higher than quoted, it means that if the stock market isn’t growing at least 7% per year, people who invest into it aren’t actually profiting at all in real terms.

Additionally, governments want to quote low inflation rates so they can get away with meagre pay rises like the 1% it is giving NHS workers across the country. The news was not taken lightly after over a year of NHS workers being stretched to the limits during the COVID-19 pandemic. But, imagine if the government had given the 1% pay rise and then broke the news, “Oh, by the way, inflation is actually at 8%, not 0.7%.” The government would have basically rewarded the NHS workers by reducing their spending power by over 7%. The funny thing is that this is the reality.

It’s in the government’s best interests to keep the inflation rates lower than they really are – it makes them look better, and keeps the public from realizing that their standard of living may be dropping.

So, what if you’re reading this and you have excess cash that is sitting in a checking or savings account? You obviously won’t want the value of it to go down by 10% each year. Andrew Craig, the author of How to Own the World suggests to find a way to ‘own’ inflation. This means to buy things that we know are going up in price along with inflation – property, gold, commodities and shares.

Dan Lok’s Wealth Triangle: The Three Steps to Wealth

Dan Lok is a Chinese-Canadian entrepreneur and business mentor, and one of his ideas is of the Wealth Triangle. It consists of three sequential pillars for someone to follow in their journey towards financial confidence and freedom.

Here they are:

1. High-Income Skills

Learn a skill that has the potential to make you over $10,000/month or $100,000/year. Lok’s idea is if you’re going to trade your time for money, you may as well trade your time for a high amount of money. A high income skill could be in anything, and includes copywriting, sales, consulting, and social media marketing.

This was a large reason why I chose to learn sales in a commission-only compensation structure – it would give me the motivation to up-level my skills as quickly as possible, while being rewarded handsomely for any success. I’m happy to say that I reached and ticked off this pillar on the wealth triangle after two years of learning and applying sales skills.

The ideal here is to develop more than one high-income skill and bring them together to create even more confidence in your earning power.

If you’re not already practicing a high-income skill and you’re unhappy with your financial situation, this is where Lok suggests you start.

2. Scalable Business

So what happens when you’re already earning five figures a month and you’re ready to go to the next level? Lok’s next pillar is to create a scalable business. Not all businesses apply to this – Lok recommends avoiding businesses like restaurants that create lots of overhead costs or infrastructure. Scalable businesses leverage other people, systems and technology in order to create income from other people’s work. The idea of scalable business is to create cashflow in addition to your income.

In the industry I work in, I was able to start up a team of salespeople in order to leverage their skills instead of only relying on my own sales for income. This involved plenty of training, running sales meetings, and holding progress reviews. It’s definitely more of a challenge that just being responsible for yourself, but it can be more fulfilling if you bring a team along to succeed with you. The reason why it’s scalable is that the team can grow and the more experienced sales reps can become managers who recruit more reps too. The top sales managers in the industry I work earn millions per year.

However, Lok highlights that not everyone is cut out to start a scalable business. There can be risks of losing money, or carrying debt. It can be stressful. According to Lok, creating a scalable business is not essential for building wealth, and it is possible to become a multi-millionaire just from a mixture of high-income skill and the third pillar.

Lok reminds us that as we move onto building a scalable business, it’s important to skill be working on our high-income skill and generating income that way. If you’re just starting off with a scalable business, it’s unlikely that it will be immediately making more than your six-figure income, so keep utilizing your high-income skills to have the confidence of paying yourself, no matter what happens in your business. In my case, that meant going out and making my own sales while also managing other salespeople.

3. High-Return Investments

Lok defines a high-return investment as an investment that provides at least a 10 percent annual return, year in and year out. This is the best way to build your net-worth after you have at least developed your high-income skill. One example Lok gives of a high-return investment is real estate.

As good as a 10% annual return sounds, Lok recommends thinking more strategically – would this money get a better rate of return if I invested it into myself in training a high-income skill, or if I invested it in marketing for my scalable business? In my own life, I took advantage of reinvesting my money hundreds of times over into matched betting, a high-income skill I learned in 2015. At the time, I was saving for a trip to New Zealand and within six months of starting this “high-income skill”, I had earned over £15,000 for my trip, and actually started earning more through betting than I did with my regular job at the time. If I had instead put the savings I made from my low-wage job into a 10% investment vehicle, I would have come away with a tiny amount in comparison. The matched betting provided me with 500+% return, although I did have to spend time actively betting on my laptop.

Lok says that if you master the high-income skill portion of the Wealth Triangle, and invest it wisely, you can create a million dollar net worth in seven to 15 years if you’re able to keep your expenses in check.

The biggest reminder of the Wealth Triangle is that it is supposed to be used sequentially. Lots of people think about investing and starting businesses when they haven’t even harnessed any of their earning power yet. According to Lok, if you’re earning less than $10,000/month, hitting this consistently should be the main focus if your target is wealth. Trading your time for high dollars gives you a foundation that you can then move onto the second and third pillars. Sinking all your life savings into a business idea, like we see on Dragons’ Den, is a result of these entrepreneurs skipping the first stage of building up their high-income skills. When the Dragons inevitably say no, they are emotionally and financially bankrupt.

In summary: Build up a high-income skill, then work on a scalable business to create cashflow, and then invest in something with high returns to expand your net worth.