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Tea with Matthew Seah: Wealth Triangle.

Wednesday, January 28, 2015

Wondering how we can be wealthier? Here is another guest blog from Matthew Seah to nudge us along in the right direction.


For me, there are 3 ways to generate wealth and they are the essential tenets of my wealth building triangle:


 

1. Increase Income;

2. Reduce Expense, thereby saving what remains;

3. Invest a portion of that savings.




Due to our different circumstances, some may find it harder to strengthen one or more of these 3 legs of the triangle. However, do note that you will certainly get wealthier if you sufficiently strengthen one or more of these 3 tenets in your own wealth triangle.

In order to get wealthier at a faster rate, you must increase your income, spend less money and make your money work harder.

 
To increase your income, you can:

1. earn more at your current job;
2. get a higher paying job;
3. get additional job(s);
4. create multiple sources of income.




There are several ways to spend less money and they involve cutting back spending on excesses and wants. AK has been blogging about frugal living. So, you can learn from him.


And, finally, investing a portion of what you have saved. This not only increases your income by investing in income-generating assets, it could also increase your net worth through capital gains. You can also use leverage to increase your money’s ability to grow but do note that leverage is a double edged sword and you could lose more than your capital if used wrongly.

The ways to increase wealth are many and possibly infinite. So be creative and think of how you could make yourself rich. Of course don’t make the wrong type of money to be rich.


Some money, we cannot touch.
Some money, we should not make.

 
Related posts:
1. Do you want to be richer?
2. Have a huge amount of savings and cannot retire?
2. Free "e-book": Don't depend on wage increases for higher income.

10 comments:

SOLIDCORE said...

Hi Matthew,

Timely tea session article to remind everyone to build their war chest for the inevitable mess on the streets.

Thanks!

Machi said...

Hi AK,

Sorry bit off topic here.

I just bought a REIT share a month back, and now the bank is asking if I want to take dividends or take shares? What criteria should I look at to decide?

Tks

AK71 said...

Hi Machi,

Ask yourself if you did not have a position in the REIT yet, at the price they offered the shares (units) to you, would you have bought? If the answer is "yes", you might want to take the shares.

For me, because I invest primarily for income, I usually take the distribution in cash.

MaoMao said...

"Increase" is green in colour. "Reduce" is red in colour. Maybe "Invest" can be gold in colour. Haha.

Matthew Seah said...

Hi SolidCore,

Building a warchest in preparation for "blood on the street" is really key.

I have been depleting my warchest for a few months now, nibbling at undervalued stocks.

Have you done the same?

Matthew

Matthew Seah said...

Hi Mao Mao,

Great idea!

Perhaps AK could change that. But given that he is a bit of a laggard in the realm of IT, just leave it as it is bah... LOL

Matthew

SOLIDCORE said...

Hi Matthew,

On the contrary, I did the opposite.

I reduced my investment portfolio to 30% from 50%. Reasons being there are simply too many red flag and red lights flashing everywhere. The last flash trade I did was on SCM bought at 2.97 and sold on 3.18, 2 days later.

What I'm doing now is to level up my understand of REITs. Bought a book on Singapore REITs and it gave me many insights on how REITs' defensive nature served it well in the previous recession. This would, I hope, give me the resolve to go in really big, up to 90% of my investible war chest when the time is right.

I also intend to hold certain REITs for a longer term when purchased in the next down cycle, letting it grow through, hopefully, double digits CAGR.

Machi said...

Thanks AK for your kind guidance!

Matthew Seah said...

Hi SolidCore,

I also did 2 trades on SCM. Bought @2.97, sold @3.16, bought @2.99, sold @3.17

I'm not that into REITs though, guess my portfolio allocation into property is getting too big to include REITs.

Matthew

Cory said...

A good job is very important. Cannot stress more. For example I know teacher and nurses are in demand and paid relatively well.

Furthermore as civil servants, with the annual calculated by multiple of 17 months, this basically pulls you ahead financially from most people.

In addition to that the stability of the job it provides. Not saying the job is easy but not many job is stressless.

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