Financial wealth drains that you ought to keep in mind

ByWealth Diagram

In your financial freedom journey you would become aware that there are many ways to deplete your wealth.

Some of those ways are Taxes, depreciation, market loses, interest and fees.

Taxes

If you are an employee then you have a w2 form and your “deductions” aka taxes probably look like this

  • Federal income tax
  • State income tax
  • Social security income tax
  • Medicaid income tax
  • Plus maybe some other minor taxes such as paid family leaves, SDI etc.

Mind you , this is taxes alone, if you stay an employee, you probably never going to be wealthy. You ought to aim to be a business owner or an investor or both.

You ought to learn the tax system so you can learn to minimize your taxes.

Hint:

If you were an investor only, with no job. And let’s say that all your investment are qualify investment then is possible to pay 0 taxes or very little taxes.

Also by the time you start paying taxes is because your wealth had grown so much that only a portion of your wealth qualify for qualify investment.

But that’s ok because by then you are already wealthy.

If you are confuse and asking yourself “no job”. The answer is, I did say no job.

Wealthy people have no jobs.

Wealthy people have businesses and investments.

Hint:

If you have businesses and investments, you don’t have to be there. Someone else can manage these investments and businesses. You just need manage the portfolio of them because you want to know what’s your wealth or what your money is doing.

Depreciation

Depreciation is when the value of something drops over time usually because of tear or wear or deterioration.

Example:

If you buy a $40k car, over time the value of the car drops.

Market losses

If you are an investor is possible to have market losses. Market losses is when the price value of your current assets declined from their original value.

Example:

If you have a stock value of $10k and it’s price value drops to $8k then you have a market loss of -$2k

Example:

If you own a rental unit that cost you $600k and the property value drops to $500k then you have a market loss of -$100k

Hint:

There are ways to protect yourself from market losses such as diversification, assets protection, investing for the long run, high cash insurance etc.

Constantly educate yourself, you’ll be surprise of how much you don’t know.

Interest and fees

Interest and fees you pay through your life time is like throwing money away.

  • Credit card payments
  • Car payments
  • Rent payments
  • Utilities payments
  • Bank payments
  • ATM
  • Broker
  • Etc

All the above can have interest and fees that you could pay. They may look smalls but the add up if you don’t pay attention.

That’s it

Take a calculated risk

Now, star and adjust as you go.

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