The Wealth DefinitionThis guide is about creating wealth. Having a clear definition of wealth is not just useful but necessary if that is our focus. Wealth is not how much money you have. Wealth is what you’re left with when you lose all your money.” Growing wealth enables you to continuously attract money and opportunities in the same way that growing a garden enables you to continuously attract the birds and butterflies.
Wealth EquationWealth creation is not about making money. It’s about creating flow.
The Wealth Equation explains the plumbing:
WEALTH = VALUE x LEVERAGE
VALUE
Water will always flow from high ground to low ground and always in that direction. The height differential will determine the speed of water flow at any one time. If you double the height of the river, you double the speed of water flow. Double the value, and you double the money flow.
LEVERAGE
Value on its own does not make the river. A river also needs width. Whereas value gives the river a gradient, leverage gives the river width. Whereas value determines the speed of money flow, leverage determines the volume of flow at that speed.
The Opposite Pole of Value1. INNOVATION
All value is created from the way we think. Some of us are born with what we call high-frequency thinking, which is often called intuitive thinking. Intuitive thinkers love coming up with new ideas and putting them into action. Bill Gates, Michael Dell and Walt Disney have all mentioned their natural creativity when they were younger. We all have some element of intuitive thinking, but some of us have it more than others. They can see the big picture, but often miss the detail. They are not as focused at what is there, but at what could be. Innovation means creating something new of value.
2. TIMING
Low-frequency is sensory thinking whom create value by having their ear to the ground. Sensory thinkers do not need to create anything new because they have an innate sense of timing. Some of us have a more natural tendency towards sensory thinking than intuitive thinking. Why create anything if you know when to sell high and buy low? Warren Buffet, George Soros and Rupert Murdoch are all individuals who are known for seeking out paterns and opportunities that others miss. Sensory thinkers are alert to their surroundings and pick up signals that intuitive thinkers miss.
Whereas intuitive thinkers always feel the need to push forward, sensory thinkers know that sometimes the best thing to do is to do nothing. Timing means creating value by acting at the right time. Some people believe that creativity and timing can be taught. There is no doubt that you can work at improving both, but if it is not your natural frequency to begin with, in the heat of the moment you will fall back on your old habits.
The Opposite Pole of Leverage1. MULTIPLY
Introverts leverage by multiplying. The way to multiply is to ask the question “How can this happen without me?” Multiplying is about making things as simple as possible and then making many. Wealth Creators such as Henry Ford, Warren Buffett, John D Rockefeller and Ray Kroc have leveraged through multiplying, whether through their systems, investments or franchises.
2. MAGNIFY
Extrovert are more likely to be found out socializing than studying a spreadsheetExtroverts are not process-oriented. They are people-oriented. The way to magnify is to ask the question “How can this only happen with me?” Magnifying is about making things as complex or unique as possible so that you become indispensable. Wealth Creators such as Martha Stewart, Oprah Winfrey, Jack Welch and Donald Trump leverage by magnifying, whether through their unique brand, leadership or deal making niche.
Wealthy by Making Other WealthyEvery great river is surrounded by tributaries. When a new source of value or a new form of leverage is found, it soon becomes clear that the wealthy do not become wealthy by making others poor. They become wealthy by making others wealthy. This is possible because one person’s value becomes another person’s leverage. Bill Gates sells more software by leveraging on Michael Dell’s PC’s and Michael Dell sells more PC’s by leveraging on Bill Gates’ software. For each of us, our greatest value is someone else’s greatest leverage.
The Eight Wealth ProfilesIf any of these wealth creators had
not followed their path of least resistance to wealth, we would not
have heard of them today. Each of us has a path of least resistance
that is based on our natural habits and talents – the ones we were born
with. If we are not on our path, life can be a struggle. When we follow
our path – and begin to play the game that we most naturally play, we
begin to excel. The longer we play, the more distinctions we see, the
better we get and the more we attract. We also find we are doing what
we love. These are the eight wealth profiles.
1. THE CREATOR: Creating a better product
Creators can’t resist creating. They have their greatest creative breakthroughs after most others would have given up. The world is also full of frustrated creators who have started a business and are now stuck running it. They did a great job creating it, but now do a mediocre job trying to manage others.
Many creators fail because of their over-optimism of what their business and their team can achieve. This optimism has led many to take on far too much, leaving them little time to do what they do best. Successful creators have delegated everything except the creative process itself – and they focus on creating new products, or new companies, while others take care of the day-to-day business.
The successful creators we will look at, who share a common strategy to achieve their successes, include Walt Disney, Bill Gates, Steve Jobs, Richard Branson, JK Rowlings and Thailand’s richest man, Thaksin Shinawatra.
2. THE MECHANIC: Creating a better system
Mechanics are tinkerers. While Creators are great at starting things, Mechanics are great at finishing things. They are perfectionists, which is why they cannot resist finding ways to do things better. Mechanics get hands-on with their systems and prefer to study how to improve things with their hands dirty. As a result, they have little interest in impressing with, or indulging in their appearance. Many mechanics have companies with better systems than their competitors, but they have not leveraged this system with stronger products produced by others, or their business is limited by their autocratic management style and high staff turnover.
Successful mechanics remain hands-on in fine-tuning their systems, long after they have become hands-off with many other areas of their business. This is where they see the greatest results, and where they gain the most satisfaction. The successful mechanics include Henry Ford, Ray Kroc, Sam Walton, Michael Dell, Jeff Bezos and the founder of Singapore, Lee Kuan Yew.
3. THE STAR: Creating a unique identity
Stars, naturally, are the easiest of the profiles to spot. After all, the value is in the person. Obvious stars can be found in the sports, music, film and entertainment industries. However, the highest profile CEOs, salespeople and trainers also achieved their wealth by following their natural path as a star.
Those stars who have ignored their path have often done so because of the bad experiences they have had being in the limelight, and the responsibility that goes with it. Others have been trained not to draw attention to their natural talents, much as they secretly enjoy it. And others simply lack confidence and knowledge, so tread a careful path incognito, blissfully unaware of the simple steps they could be taking to claim their wealth.
4. THE SUPPORTER: Adding Value to a Wealth Creator in Time & Resources
The Supporter is outgoing, loyal, reliable and a fantastic networker. Their value is in the heat of the moment – the relationships they create and the wealth of energy, enthusiasm and time they can offer. By linking this resource to a wealth creator, supporters can create much greater wealth than they could on their own.
Successful supporters can be found around every very successful wealth creator, whether that profile is a creator, star, mechanic or deal maker. However, many supporters have found success without aligning solely with one wealth creator. As a result, there are many CEOs of well known, listed companies who are supporters. You can also find supporters successfully running businesses in support industries such as PR, recruitment and marketing. High profile supporters include Steve Ballmer and Michael Eisner.
Most failed supporters mistake their profile as an employee doomed to a life of salaried income, often having tried to start a business or investment with limited success. For nearly all supporters who are not on their path to success, what is missing is the understanding of how their role as a supporter can unlock great wealth.
5. THE DEALMAKER: Connecting the right people at the right time
Successful Deal Makers tend to catch the imagination of the business world, with their sweeping gestures that make millions in a moment. Of all the profiles, the deal maker relies most on the relationships around them, as their wealth is created by the connections they make. With a sensory dynamic, deal makers are reactive, acting on the right opportunities as they happen.
Deal Makers can also be found wherever there exist assets with significant value differentials, such as in property, corporate mergers & acquisitions, and in the entertainment business brokering multi-million dollar brands. The highest profile deal makers include Robert Kravis, Li Ka Shing, Donald Trump, David Geffen and more notoriously, Don King.
Most failed deal makers are really deal-makers-in-waiting. They have never seen this as a credible way to create wealth and have never pursued this path. Or they have just never been aware that this was their main talent and would never do so unless they stumbled into it by chance. However, of all the profiles, when a deal maker finds his path, his wealth is one of the first to arrive!
6. THE TRADER: Buying low and selling high at the right time
A real trader is someone who naturally looks for bargains for the fun of it. They love haggling or seeking out the lowest price with the satisfaction that they found it first, and then they are equally good at seeking out the buyer who will pay a higher price. As with the Creator, the trader can be both introverted and extroverted.
Extrovert traders will do this where they can influence the price through hard bargaining and can be found in import/export businesses, and the retail industry. Introvert traders are happy to trade through analysis rather than face-to-face bidding, and include all successful market traders.
Many failed traders have never traded. As reliable and hard-working employees, they may see either the buy side or the sell side of a transaction within the company they work for, but often never the two together. Only when they are in control of both sides will a trader become aware of the natural talent that they have.
7. THE ACCUMULATOR: Buying & Building Appreciating Assets
The accumulator is the safest of the profiles, relying on a system of incremental growth to achieve wealth. The book “The Millionaire Next Door” is based on the accumulator profile, as it is one of the most fool-proof to follow. Many wealth seekers adopt the accumulator strategy but either lose patience or get itchy feet and move on. The real, successful accumulator is patient enough to stick with it, and disciplined enough to keep to their system.
Accumulators are patient, systematic, considered and prefer to play safe. However, others sometimes mistake this for indecision and procrastination. While others may be ostentatious with their wealth, accumulators rarely are, which is why they often go unnoticed.
8. THE LORD: Controlling Cash Generating Assets
The lord is the epitome of Stealth Wealth. Rarely seen but rolling in cash, the lords of the World control everything! They control the land, they control all the natural resources, they control all the man-made structures. They may not own them, but they don’t have to. They are too busy counting their money! Lords can be found wherever there is a fixed asset that is generating cash, whether it is a rented property or a leased vehicle, whether it is a gold mine or an oil field.
If you are a Lord, yet have not yet become a successful one, make it your priority to find a mentor who has made it. You will be amazed at how simple the process can be and how fast wealth was created. Lords look at the entrepreneurs and stars of the world and in most cases believe they could never do what they do, and would never want to either.
WEALTH DYNAMICS by Roger Hamilton. as taken from
Rita Sharon's blog, with permission
just in case you want to take the test, wealthdynamics.org will cost you 100 USD
