3 Ways to Build Your Scalable Wealth Bucket
Which bucket could maximize your wealth? Business, Real Estate, or Stocks?
There are three wealth buckets:
- Business/Entrepreneurship
- Real Estate/Land
- Stocks
There is no guaranteed success for each bucket, and the universe doesn’t know what will happen next when it comes to the markets and economy.
When I first started my investment journey, I was always overly impressed with the smart people who made their way to high wealth levels and had significant knowledge in at least one wealth bucket. It took me a while to diversify my wealth buckets, although you do not have to have all wealth buckets to be successful.
To find your wealth bucket, be transparent about how you invest, what you can do well, why you own it, what you won’t invest in, and who you are personally. After reading hundreds of financial books and journals, I learned that all people invest differently. Some are uniquely talented in one area of investment vehicle, and they know how to invest well and be profitable. I enjoyed reading about various strategies on investment and how the wealthy allocate their capital. Reading many people’s success stories taught me to try investing in multiple platforms and find my investment preference and strategy.
The first wealth bucket is Scalable Business / Entrepreneurship.
Creating a scalable business is building a system that will work without your presence and time. Tech companies seem to be the most popular scalable business today, like Apple or Tesla. However, building a company like Tesla sounds almost impossible. The good news is that you don’t have to have an engineering background to create a business because some scalable entrepreneurship solutions exist.
Blogs or YouTube
Writing platforms like Medium pays you for your writing. This blog concept business is scalable because you do the work once and get paid while you sleep. YouTube is a similar concept, but it is about creating a video. You don’t need to pay anything to make a Medium site nor YouTube, but your income depends on the web traffic and engagement scores. You can also create a separate blog if you have a significant number of followers and can reach at least 1,000 in a monetizable niche market. There is some cost involved with website maintenance, but you can own your audience and build an e-mail subscription list for future follow-ups with your readers.
Online Courses or E-book
If you have some experience in a marketable subject, creating an online course or an e-book is a great way to start earning an income from the knowledge that you share. Some of the sites that you can teach online are Udemy or Coursera. Anyone can be a teacher if you have a passion for teaching and a knowledge base.
Creating an e-book is another excellent way to increase your income. I have published several e-books before with self-publishing through Amazon. Anyone can write and publish an e-book with determination and effort. I love writing, so writing an e-book was a natural transition to express my knowledge and passion.
Both ideas follow the same business concept of scalability, and you can earn income without trading your time. The scalability in both business ideas is exponential, and the growth depends on your efforts and talent. Like anything else, if you are entering this digital business industry, you will need some time to hone your writing or video editing skills. I believe that everyone is born with at least one valuable talent that can contribute to the world. With online businesses and platforms, you can maximize your time and increase your net worth as you build your online presence.
The second wealth bucket is Real Estate.
There are two ways to build wealth with real estate.
- Capital appreciation when selling a home
- Rental properties
This is a great wealth appreciation strategy because real estate is not as volatile as stocks. The capital reservation in the value of a home is less risky compared to other investments. The home prices tend to rise over time historically (depending on where you purchase your home). I like real estate investment because it retains its value for the long-term. For instance, I bought a starter home for $200,000s near an elementary school in a suburban area. Two years later, a new Whole Foods store opened five minutes from my home, and more retail shops opened in a brand new shopping mall. Now my starter home appreciated to $300,000s within the past five years.
I have a choice to sell or keep as a rental property. I decided to keep it and become a landlord.
Once you’ve paid off the property, your rental property will pay you monthly payments from a tenant. As a landlord, you invest the money once, and you get the residual income without much effort.
The only downside with this wealth bucket is that you need to invest significant capital in the beginning, at least 20% of the home value to qualify for a mortgage without PMI (Private Mortgage Insurance).
The third wealth bucket is Stocks.
The key to this bucket is that you must invest early as soon as you start to earn money. Buying stocks is the best way to invest in businesses that you can’t create for yourself. A stock is a piece of ownership for a company of interest. If you do not want to buy individual stocks, you can invest in index funds, mutual funds, or exchange-traded funds. This is the most volatile wealth bucket so you must invest with the leftover funds that you do not need immediately.
Stocks is scalable in two ways:
- Capital appreciation when selling a stock
- Dividends
The companies work hard to grow their business day and night. As an investor, there are not many things to do when owning a stock to get paid. Some large-cap companies even pay you dividends based on the number of your shares, mostly 1 to 5% of their earnings.
I invest in stocks while I am learning about stock investment strategies. I started investing with a humble amount of seed money years ago and grew little by little over time. The most important lesson that I learned as I raised my net worth in stocks is that my mindset is everything. If I am not ready to accept a certain amount of wealth, I won’t keep it. I have also learned to be patient in the process as I love building wealth in a gradual progression.
None of these three buckets is easy to tackle, and they require a significant amount of time and knowledge to be successful and scalable. No one is successful in all three buckets, but it is a great idea to know which bucket is your potential. Putting your hands on these scalable wealth buckets is the way to grow your net worth and diversify your asset classes. I hope that you do not have to trade time for dollars by building your scalable wealth bucket one at a time.
Action Steps
Executing is the most challenging part.
Which wealth bucket is most appealing to you?
How are you going to scale your income?
