The $7 Million 7 Years Wealth System

KLE 84: Rapid Capital Accumulation

Posted by AJC
November 1, 2010

One of the secrets to financial success is to grow your capital – indeed, it’s one of the key ingredients in the $7 Million Dollar Formula (KLE82).

That’s why ‘capital accumulation’ strategies such as Conservation, Reinvestment, or Concentration (KLE83) are so important. But, there are other, even more powerful methods available …

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First, make sure that you’ve maxed out your Conservation, Reinvestment, and Concentration strategies. You may think you already have, but what about your family? Can they help? Can your spouse work or assist you with Your First Business (KLE78) to free you up elsewhere?

Are you saving for your children’s college? It may be controversial, but can they pay for their own college by taking out a loan? If so, is it possible that by reaching your own Number that you can help them out later and better? It’s a hard choice – but, the journey to your Number will be full of hard choices. Still, it’s only a choice that you can make!

How about your children? Can they earn their own pocket money to free you up from some of the discretionary expenses that they like to lean on you for?

These are all legitimate ways for you to build your Capital.

Fortunately, you don’t need to go overboard … because, like saving and expense-cutting, these are all limited ways of building capital. Now, you need to find some unlimited methods for rapid wealth accumulation:

Your Available Capital

You probably already have some capital available: Do you have an emergency fund? Can you rollover your retirement fund to the kind that lets you manage your own money and make your own investment choices?

If you said, YES to any of these, then you may have a ready source of cash available to fund your Growth Vehicle investments, simply by cashing these out.

Having a retirement account is a safety net (i.e. insurance policy), so you should avoid tapping into these funds. But, you should try and gain control of your own retirement accounts so that you can make better investments within the fund. Consider cashing out all or part of your retirement account a Capital source of last resort!

Partner With Capital

You may not have the capital that you need to fund your Growth Vehicle. But, other people may: eventually, this may mean going to strategic investors who will take equity in your project in return for providing the missing Capital that you may need.

But, there is a down-side: as you add Capital, you are also dividing the investing pie, and a smart investor will always want their pound of flesh. While this is a way to tap into large amounts of Capital, relatively quickly – and, is certainly a path that you will consider as your Investments become larger and more successful – this is an Capital source to be used very sparingly, unless you like partners who tell you what to do!

But, there is a legitimate way to ‘partner with capital’ that you can and should consider in the earlier stages of setting up your Growth Vehicle – after you have exhausted all of your own Capital – and that is to use the resources of your 3F Network: Family, Friends, Fools.

These are the people who will add to your Capital (often at relatively little cost in equity, and very little loss of control) because they are investing in you.

You should tap into this resource, but only if you are exceedingly confident in your own success!

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In the next KLE, we will take a fresh look at the most misunderstood – yet, best – source of capital for the new investor …

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