Truth and Lies about Creating Wealth

I’ve been writing about creating wealth for a dozen years. Before then, I wasn’t writing about it. I was doing it.

My income has actually increased since I stopped actively “creating wealth.” But that’s the thing about getting rich – when you get rich, it is just too damn easy to get richer.

It’s not fair, but it’s a fact.

When I decided to get rich, I didn’t know the first thing about the subject. I was an editor. I wanted to be a novelist. I had never taken a course in finance or economics. Plus, I was broke.

But I had a great advantage. I was working for a human wealth machine – a man who, at 43, had already created three hugely profitable businesses. He decided to adopt me as his surrogate son and taught me everything he knew.

I retired 12 years later with a net worth well in excess of $10 million.

Two years later, I went to work as a business consultant to Agora. Bill Bonner, Agora’s founder, adopted me as his kid brother. He also taught me everything he knew. In the 15 years that have passed since, my wealth has multiplied many times over.

When I turned 50, I wrote about entrepreneurship (under my pen name Michael Masterson) for 10 years. I wrote close to a dozen books and several thousands of essays. I adopted my readers as my surrogate siblings. I told them everything I knew about starting businesses.

Then at 60, I retired the “Michael Masterson” pen name, sold Early to Rise to Matt Smith and Craig Ballantyne, and went to work for The Palm Beach Letter. Since then, I’ve attempted to tell my readers everything I know about creating wealth – which is a bigger and more complicated subject than entrepreneurship.

In today’s essay, I want to tell you the most important things I’ve learned about building wealth. I won’t tell them in detail… but I’ll tell you the principles. And I’ll tell you how you can get all the detailed information you need if you want to emulate my experience.

Don’t Believe These So-Called “Facts”

Let’s begin with some of the lies about creating wealth. At one time or another in my wealth-building career, I foolishly believed in the following so-called “facts”:

• Wealthy people are stingy for a reason. The secret to becoming wealthy is to scrimp and save.
• The stock market is the most efficient way to invest. You can’t become wealthy unless you understand and master the stock market.
• Geopolitics determines investment outcomes. You can’t become wealthy unless you understand politics and economics.
• The general public is always wrong about economic and financial trends. The fastest way to acquire wealth is to invest as a contrarian (i.e. against market sentiment).

Do any of these “truths” sound familiar? Have you been following any gurus who advocate these “facts”?

If so, pay attention. I’m not the only person in the world who went from broke to rich. There are many, many people who have done so. And some of those people have written books about it.

I don’t read all the popular books on wealth-building, because I feel comfortable with the system I’ve developed myself, through my own experience. I don’t follow the advice of others, except when it dovetails with my own experience.

But that’s not to say that my system is the only system that works. Nor do I want to argue that it is the right system for you. All I can do is to report my own experiences to you as honestly as I possibly can.

You are my surrogate siblings. I want you to succeed. The only way I can help you is to tell you what I know to be true. And this is what I know – from my own experience – to be true about creating wealth:

Truth No. 1

You’ll never get rich unless you understand some fundamentals about saving, spending, and investing.

Truth No. 2

The single most important factor in avoiding the spending spiral that kills wealth is to stay in the house you have now. Nobody else that I know of has made this simple point. But I can tell you that it is true.

Truth No. 3

Stock investing (or even bond investing) is an inadequate strategy for building wealth. It won’t get you rich or make you wealthy, however much you wish it would.

Even Warren Buffett, the world’s most successful investor, knows this. His wealth has come not from being an individual investor but from being the principal of Berkshire Hathaway. Keep that thought in mind every time you hear his name quoted.

Truth No. 4

The single most important factor in wealth-building is the size of your investible income. Investible income is what you have left over each month after you’ve taken care of your lifestyle expenses.

Again, nobody else I’ve ever read had the courage to say this before I did. (Now I see one of my protégés saying this and, of course, I am flattered to hear him pretending it is his own idea.)

Actually, that’s the second-most important factor in building wealth. The No. 1 strategy is acquiring equity in a startup business. There are many ways to do this. The most commonly talked-about ways are downright foolish. But there are smart ways to do this, even if you are a novice to business.

Truth No. 5

Investing in rental real estate is unique – it stands halfway between active income and passive income. Next to entrepreneurship, it provides the highest return you can get from any financial endeavor.

Truth No. 6

The biggest mistake retirees make is giving up their active incomes. I know that this is exactly what you hope to do some day. But I’m warning you, it’s a big mistake.

If you are already retired, you are probably hoping you can replace that income with passive investment strategies. I’m here to tell you that they won’t work.

To keep your wealth for a lifetime, you need multiple streams of passive income. Your goal should be to build each stream of income to a level at which you can live on that and that alone.

Do these statements make sense to you? If so, how are you doing?

Our Mission to Help the “Not Yet Wealthy”

Every week, we receive letters from subscribers who are new to The Palm Beach Letter. They all say the same thing: “I feel like I’ve finally found a trustworthy source of advice, but I’m not a wealthy person. In fact, I am worried I don’t have enough money to follow the advice that I’m being given.”

When I received the first letter that made this point, I thought, “Boy, isn’t that the truth?” It is so difficult to create wealth when you are essentially broke and feeling burnt out by following so many of the “lies” I mentioned at the beginning of this essay.

But then I thought, “What the hell are you going to do about this, Mark? Will you write a condolence letter? Will you ignore the letter? What can you do or say to help people in that situation?”

And that’s when we came up with the idea of the Palm Beach Wealth Builders Club.

The idea was to form a community of our subscribers who were “not yet” wealthy. We would teach them everything we knew about building wealth from the bottom up.

We would assume that they didn’t have $100,000, $50,000, or even $20,000 in cash to start with. We would resist the temptation to allow them to think that The Palm Beach Letter‘s stock, bond, and options recommendations would solve their problems.

We would tell them the truth.

And so the Palm Beach Wealth Builders Club was born. Since then, we’ve been working day and night to develop the best wealth-building program in existence.

I’ve done a lot of the heavy lifting myself. But I’ve also brought in Tom Dyson (our publisher), Tim Mittelstaedt (our editor in chief), and the rest of the PBL team to help me.

And through them, we’ve recruited some of the sharpest wealth-builders we know. The goal was very simple: A program that could help club members generate a seven-figure net worth in seven years or fewer.

That seems like an impossible goal. But I assure you it’s not. I’ve seen motivated, young, and driven individuals do it time and time again during the past 30 years of my career.

Now, the Wealth Builders Club is a work in progress. We have so much more planned for it. But already, it is much better and much more comprehensive than anything else I’ve seen.

Look at what some Wealth Builders Club members are saying:

I greatly appreciate your membership advice and do have to admit that you guys are the most down-to-earth, caring, most “interested in the success of others” publication I read. I read approximately four to six others and am seriously contemplating cancelling “all” other publications in the interest of following your advice only – Club member W.G.

It’s been a truly remarkable journey, to say the least. I’m not yet sure what got me so fired up, but I believe that sending in my signed pledge to Mark started something inside me that is still burning hot today. It seems I created this little promise to someone I look up to, and in doing so, I felt I wanted to prove to that person (and myself, of course) that I could pull it off – Club member Erik F.

You guys are amazing! I’m busy reading your materials, studying Mark’s books, and five or six other things that you’ve suggested. And I thought I was busy BEFORE I joined the Palm Beach Wealth Builders Club!

It’s very clear to me that by seven years from now, my life and financial situation will bear little resemblance to their present state. Then, it will be MY privilege to send a huge “thank-you” to you guys. (I have seven years to figure out what unusual gift I can send.) – Club member Jake D.

Now spend a few minutes to read what follows. It is a preview of what you will learn by becoming a member of our club:

1. “The Extra Income Project.” This is a brand-new program designed to help you create a second or even a third stream of income. As I have explained many times, including above, “There is no faster or surer way to become wealthy than by creating extra income and allocating it toward one’s investments.”

It features essays on my favorite extra-income opportunities. These include ideas for making extra income from your current career, plus many great ideas for accessing extra income from side businesses, freelancing, investment “jobs,” and so on.

In my opinion, this is the most important series of the entire club.

2. “Rental Real Estate 101.” As you may remember from reading previous essays in The Palm Beach Letter, the largest portion of my wealth has come from investing in rental real estate.

I am convinced that this is the best time to buy rental property in my 30-plus years of investing. This series brings you individual “lessons” on how to profit from the rental real estate market.

3. “Retire Next Year.” We developed this program after we learned from a survey we recently sent out that 66% of Palm Beach Letter subscribers want to retire in fewer than 10 years – yet aren’t financially ready to do so.

As a consultant to International Living for 20 years, I know dozens of ways you can enjoy a happy, rich, and fulfilling retirement in beautiful places around the world and even in the United States.

Like the Extra Income Project, this program has two parts: my essays and a series of “how-to” manuals or blueprints, if you will, on how to replicate these exact lifestyles anywhere in the world.

4. “Living Rich.” This is one of my pet projects. It is not about adding income or investing, but it’s about living richly on the income you currently have.

I’m always telling the PBL staff that living rich has very little to do with how much money you make or how many millions you’ve socked away in brokerage accounts.

In a series of essays, I will tell you about how to enrich every aspect of your life, from the house you live in to the car you drive, to the vacations you take, and so on.

5. “How to Start a Million-Dollar Business for $25,000.” This will contain all of my best ideas about entrepreneurship from the 2,500 essays I wrote at Early to Rise and my six bestselling books on entrepreneurship, business management, and marketing.

6. “Income for Life Premium.” We’ve talked a lot about Income for Life in The Palm Beach Letter. It’s a way to grow your cash at up to rates of 5% tax-free. (If you’re in a 28% tax bracket, that’s like earning 7% in a regular brokerage or bank account.)

Wall Street has put billions of dollars into it. It’s been around for 200 years – longer than anything Wall Street has invented.

The companies that help administer the Income for Life system are so safe, they’ve paid dividends upward of 150 years in a row – through every recession, depression, world war, or crisis our world has faced.

On its own, Income for Life is a great savings vehicle. But there’s so much more you can do with it. You can use it to finance expenses such as a car, vacations, or your kids’ college. Or you can use it to super-charge your investments.

With Income for Life “Premium,” Tom and his team delve into the specifics of how to set up and use this system. They’ll feature case studies, interviews, and webinars on how to use the advanced features that come with Income for Life.

Wealth Builders Club members get Income for Life “Premium” as part of their club membership. Soon, we’ll be selling it on its own. We haven’t decided on a price yet, but we’re thinking of charging $1,000 for it.

Click here to get started in Mark’s Wealth Builder’s Club

[Editor’s Note: For the last three years Mark has been involved in a new venture, Common Sense Publishing, which he runs with a forensic account and former Citigroup banker named Tom Dyson. Mark’s latest project is the Wealth Builder’s Club. Click here to find out more about it. – I highly recommend it and look forward to each one of their updates. – Craig Ballantyne]