THE MYTH ABOUT BILLIONAIRES AND A BILLION DOLLARS IN THE BANK ACCOUNT

                                         

           THE 4 STAGES OF WEALTH

by Onochie K. Dothan

Have you ever wondered what it feels like to own a Turquoise-built Quantum of Solace yacht or a Bombardier Global 6000 luxury jet, or an island in the Caribbean or maybe it’s having $10 million cash in your checking account ready to be splurged. The good news is that your desires can be translated into reality and all you have ever wanted become real. But this can only happen if certain conditions are met. So let’s dive into the stages of wealth so you know where you currently occupy and what you need to do to move up the scale a lot quicker. Now even if you’ve not began this journey and do not currently occupy any of the 4 stages, don’t panic, at least now you’d know what your next step would be and also you’d have a sense of direction.

Although we have several levels of wealth which is basically subjective, there are 4 stages of wealth that fundamentally, every successfully wealthy individual must experience. So except you reside in the windfall category (a term I coined) where the goddess of luck lives and you get to win the national lottery, marry into a wealthy family, or get an inheritance from a wealthy distance relative, you would almost always have to go through these 4 stages of wealth. They are as follows:

• STABILITY. So let’s use the analogy of erecting an edifice. Before your house could stand the way it has for a time it most certainly has a foundation which is the most basic and fundamental part of any building. This stage is much like that. For you to build wealth and enjoy independence, your finances needs to be stable. So that means you will need to get at least one source of consistent income if you don’t currently have one. When that is settled, you need to pay down your debts and as much as possible avoid further debts. You’ll also need to pay your bills regularly and promptly too, especially if you have recurrent bills that tend to buildup on interests. Don’t try to save a penny and loose a pound. After this, you make a disciplined habit of saving. Yes, believe it or not this age old principle still works because saving is literally the only way to have surplus. There are different kinds of savings which suits different needs and it is important to categorize your savings plan i.e. emergency funds, tuition funds, leisure funds and so on. Once this stage is “stable” you are now able to transit comfortably to the next stage.

• STRATEGY. So in the first stage you saved up a good sum and you are feeling fly. The bad news is that keeping aside a percentage of your income won’t get you wealthy, at least not in the shortest time possible. So let’s say your goal is to have assets (cash, equities and real estates) valued at $1 million which is approximately ₦524 million at parallel market rate as at the time of this writing, wow! Right? Let’s also assume that you religiously dedicate 20% of your $382 (₦200,000) monthly income to savings which roughly adds up to $76 (₦40,000). By my calculations it will take circa 1,092 years to have reached your goal of a $1 million. Daunting right? Well, the good news is that it doesn’t have to be. That’s why this second stage speaks of the art of getting from where you are to where you want to be in the shortest possible time and not waiting for a millennium to hit it big. Investing, my friends, is that strategy. You’ve got to make those green soldiers (or whatever colour your currency is) work extremely hard for you. So you ask, where can I invest my savings? Well I’m not a financial planner neither am I an investment expert but there are numerous ways and places to invest that money you have so long set aside. You could invest in the money market, stock market, collectibles and art, real estate, mineral resources, cryptocurrency, foreign exchange market, the list is endless. The only factors to consider when making the decision on where to invest would be how much you have to invest, your level of risk tolerance and your reason for investing. Now once your money is well invested and you can boldly replicate the strategy on a consistent basis, you can now move to the next stage.

• SECURITY. So now, continuing with the edifice analogy, you have erected your walls, doors, windows and iron bar gates. You’ve mounted your roof and fixed your ceiling. You set up your interiors like you’re some sort of an expert and now you are ready to unwind and take it all in. That’s what this stage is all about. So you invested in a couple of assets and the year on year returns are unbelievable. You feel secured because not only do you have another stream of income, you have it passively that is, you literally do not have to lift a finger to earn that bucks. So now you can eat nice foods, take time to travel around to inspire your senses, get a new car or whatever else you consider having a good time looks like. You are not yet wealthy as you would like and can’t really do a lot without straining yourself, but you can do so much that you couldn’t at the start of this journey. That’s one way of looking at it. On the flipside, if you perhaps tend towards frugality, you could tone down the ‘good time spree’ and take on more investments with the dividends and payoffs of your previous investments thereby creating a possibility for immense wealth.

• FREEDOM. This has been the aim all along. The final stage where you can boldly say you are financially independent. Getting to this stage did not come without sacrifices and delayed gratifications. It took disciplined actions to get here and it sure will take disciplined actions to remain on this plane.  At this position you can actually go wherever you want, buy whatever you like, eat whatever you want, meet with whoever you wish, take on any charitable cause that speaks to you, donate sizeable funds to your favoured political party and so on. At this point, money is not the issue; the issue would be where to spend it. Practically everything is obtainable at this point because you have insane amounts of disposable income at your, well, disposal. In order words, your quality of life increases. 

To get to this stage of wealth requires eagle-eyed focus, ridiculous amounts of delaying gratification and discipline. But in the end, it’s all worth the ‘trouble’. So in summary, wealth do not create themselves, they are actually the consequence of the intentional and conscious decisions of the individuals who consistently make the effort to acquire them.