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Wealth Building for the Average Joe PDF Print E-mail
Written by John D. Buerger, CFP®   
Thursday, 22 October 2009 15:09

Have you ever seen one of those Bowflex Gym commercials on TV?  "Just 20 minutes a day" and you're supposed to end up looking like that well chiselled muscle man who is demonstrating the product.


I don't know if the Bowflex really works that way or not although my experience has been that if you put a certain amount of effort into ANY workout program you can end up looking like that guy.  In fact, you can do it without spending the money on the Bowflex or any other gym membership).

It isn't the equipment that you use ... or really even the exercises (although some exercises are more productive than others).  It is the consistent effort applied over time that matters.

... and ANYBODY can do it.


The same thing goes with Buildling Wealth.

Building Wealth and creating a secure future for your family only requires a consistent effort applied over many years ... and ANYBODY can do it.  You don't need to have a big-time investment account (Bowflex machine) or even a financial advisor (physical trainer).  These things can help, but they aren't required.


The most powerful tool everybody has for building wealth is cash flow management.  It is the key to creating a secure future for your family.  If you were to save 10% of every dollar you were to make in your life, I guarantee you would be financially free long before you reached your retirment years.

That's pretty simple.  Unfortunately, most young people are never given that message.   The later you start, the higher that required savings rate goes.  But even then, no matter what your income, building wealth is possible ... and it isn't all that difficult if you have the right tools and proper framework.


This isn't what is promoted by the financial services industry, or what we are led to believe by the main stream media.  It isn't even taught in schools.  You can call this a conspiracy theory, but the only possible reason why we don't teach this absolutely fundamental truth to every young citizen through our public education system is that it is beneficial to someone (or many someones) in power for the bulk of the citizens to be financially illiterate and close to broke.


The vast majority of businesses in the "wealth management" and financial services industry are built around an Investment Management model.  They deal with either your qualified retirement accounts (401(k) and IRA) or your investment accounts (stock broker).  In general fees are based on a "per transaction" basis (commission) or an "asset under management" basis (AUM is the fee as a percentage of the amount of money in the investment account).

In either case, you pay this fee in return for a supposed higher rate of return on your investments that you could get without paying the fee.  That's their value proposition - you make more on your investments (the value) and pay me a part of that extra gain in return for it.

There is a serious question of whether or not they can actually get you more return than you could do on your own in return for the 1% fee, but regardless this whole exercise is still missing the point.

Even if you COULD net a 3-4% improvement in your investment returns, that would not have half the wealth building benefit of saving an additional 5% every year!


As a society we focus all this time, energy and money (investment services and mutual funds are a multi-trillion dollar business) on investment management and how the stock market is behaving ... and we completely ignore the most powerful tool at your disposal to building wealth - CASH FLOW.

I believe the reason is simple - nobody has figured out how to monitize this service.  If they can't be paid for it, there is no incentive to offer the service.

We all have to eat, right?


Over the past year, I have been working on a new "framework" for viewing your income and expenses.  By using this framework, clients have been very successful at improving their cash flow by at least 5% while spending less money on things that they really didn't want anyway and actually buying MORE of the things that were really important to them.

This framework is something we call the "Cash Flow Hydrant™" and we teach the basics in most of our "Wealth Health™" and "Money Matters™" classes.  I also share it with every financial planning client I have (as an added bonus for continuing to work with me as their financial planner).


We have figured out how to provide this critical service at a reasonable cost so you can get the benefits of more savings and we can put food on our own table.

The Cash Flow Hydrant is available as a "stand alone" service (email me at jdbuerger@altuswealth.com for more details) or as a value-add to our comprehensive planning services.  If you want to learn more about how the Cash Flow Hydrant works, then you must attend one of our workshops.  The next one is our Money Matters Workshop coming up Saturday in Paso Robles at Cafe Vio.  Go to http://bit.ly/MMFinfo for more information.

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Last Updated on Thursday, 22 October 2009 18:48