Saturday, June 19, 2010
I read the big lottery winnner stories, and I despair.
Because it seems no matter how much these folk earn, most of it is gone in a few years... squandered on high-living.
Or, as English footballer George Best famously said of his lost millions: "I spent most of it on booze, broads and fast cars. The rest I wasted."
Here's 3 things you should start thinking about now - before the vast millions of dollars drops into your bank and you go stir-crazy with all the unasked advice you'll receive:
1. - Don't listen to friends. Rarely will they have the knowledge to tell you how to invest your $10's of millions. While they will have your best interests at heart and are well-meaning, these are not the people you should speak to.
This is the time to go and see a financial advisor at a government-backed bank. Head for the guy who manages HNWI accounts (that stands for High Net Worth Individual. Most global banks have a separate division for those individuals).
2. - Take a spending break. Just clamp up your wallet and don't spend a cent. I know, your natural instinct is to start paying everything off and giving money away to family. But don't, yet.
As I mentioned in an earlier newsletter, some gifts will attract tax in some states or countries. You could easily end up with a tax bill which could wipe out your hard-won dollars. You need to figure all that out before you start throwing greenbacks out the window.
3. - And here's my personal answer. You don't hear this solution talked about much because it is quite a radical step in these days of instant everything. Yet it is based on wisdom built over centuries of experience...
This: Don't ever spend your winnnings!
Padlock it up and make it untouchable.
I'm suggesting that instead of spending it, make your once-in-a-lifetime bonanza produce an everlasting income stream for you, like this...
Let me explain.
In the olden days, the wealthy had a rule.
It was simply this: "Don't touch the capital."
Capital - money or buildings - was the source of all income. These property holdings and funds which produced unceasing money.
Like a never-ending stream, these sources would keep pouring out cash forever.
And the rich lived off the interest or rent - but never touching the capital.
Good times or bad, their golden goose would keep producing like there was no tomorrow. And the clever among them would feed back that stream into the capital again and again, until it became a raging torrent.
To join the favored few in this position, put your winnings into commercial property, bonds or other financial instruments recommended by your HNWI advisor, and live off the income. Forever.
That's what global best-selling "Rich Dad" author and investorRobert Kiyosaki says too.
It will never run out.
But once your capital is gone - like a drowned rat, it cannot be resuscitated.
Turn on the money tap and you need never worry again!