I often hear people bemoan about the fact that there isn’t a simple and straightforward magic equation for building one’s wealth. But what they don’t know is that there is one. We’ve created the Wealth Building Formula, which states: C x T x % Return = $$$. So, let’s go back to algebra class so you can determine your own requirements for the Wealth Building Formula.
First, what does the variables stand for? C is investable cash or the amount of wealth you need to generate cash flow. T is the time frame in which you want to gain your financial independence. % Return is the long-term investment return objective that you need (from your investment portfolio or from finding more investable cash) to make sure this all works and that the cash flow you are generating equals the cash flow that you’ll need in today’s dollars at the point when you retire or decide to do something else. When we work with clients, we use this equation to make sure that each of them has their own personalized Wealth Building Formula® and their own benchmarks to track.
In order to determine what those values are for each individual person, we must first find out what they see for themselves — both now and in the future. What kind of cash flow do you need to make sure that you can live the lifestyle you wish? What does that equate to in wealth? What types of investments do you need so you’re your amount of wealth generates the needed cash flow? What kind of time frame are we talking about to get to that point? Then, what percentage return do you need? What long-term investment return objective should you have so that you can properly construct your portfolio and balance it with the risk you wish to take?
The answers for these questions will determine the values necessary for your own personalized Wealth Building Formula. Sometimes it takes some trial and error to determine the best solutions for your financial situation, but that’s what the formula will show. By honestly and accurately examining the life you want now and in the future, we’ll be able to insert a couple of different scenarios to determine which one will actually work best for your life.
For more information about discovering your perfect wealth formula, visit tswealth.com.