Make Thy Gold Multiply

monopoly

“I tell you, my students, a man’s wealth is not in the coins he carries in his purse; it is the income he buildeth, the golden stream that continually floweth into his purse and keepeth it always bulging. That is what every man desireth. That is what thou, each on of theee desireth; an income that contunueth to come whether thou work or travel.

-The Richest Man in Babylon

As we continue working through The Richest Man in Babylon’s Seven Cures for a Lean Purse, we have already covered setting aside one tenth of our income and cutting back on unnecessary expenses.

The third cure for a lean trading account is finding ways to multiply the money you are saving because of the first two cures. This component is critical, because your primary income alone will never be enough to create true wealth.

Obviously this is where successful trading can come into play, but until you have amassed a pretty significant fortune, I don’t believe that trading alone will get the job done.

While I fully believe that it is possible to consistently beat the market, what exactly does that mean?

Let’s take the QG Fund for example, which has a track record of averaging just under 20% per year. Most would consider you to be a very successful trader if you were able to make 20% every year. However, if you are just starting out with a few thousand dollars, and only able to add a few thousand each year, this approach is never going to make you wealthy.

I believe that you will need to find some way to bridge the gap between the 10% of you income that you are saving and having a six or seven digit sum to trade with. That’s where most strategies fall short.┬áIt’s also the hardest part.

This bridge investment that takes you from meager savings to significant savings needs to be able to produce high multiple returns with minimal risk. I don’t know any way to create these kinds of returns in the stock market, but there are plenty of opportunities available on main street.

For me, it looks more and more like the answer is a combination of freelance writing and Amazon selling. With Amazon selling, I am able to return 50-200% on my investments in anywhere from one week to six months. It doesn’t take any complicated math skills to realize that the annualized return there is borderline ridiculous.

But that’s not the only way to bridge the gap. I have seen people quickly build fortunes through real estate flipping. I’ve also seen people create these kinds of returns by buying and selling cars and boats.

Because I’m not a very outgoing person, network marketing has never appealed to me, but there are plenty of opportunities to create wealth there. I’ve also read tremendous success stories from people who have created software as a service businesses. There’s also a list of people who have build fortunes from internet businesses like many popular bloggers.

Depending on your moral standing, you might even consider taking sports bets or making payday loans in order to capitalize on all of the people who aren’t worried about creating wealth for themselves.

There are hundreds of ideas just like this out there in the world when you approach each day with an eye out for opportunities to invest a small amount and return a larger one quickly.

Finding ways to multiply your savings will be the secret ingredient that kicks your wealth generation into high gear the way saving and budgeting alone never could.

Photo Credit: John-Morgan via Compfight cc