Trying to build your wealth? There's a better way

And now for an unpopular opinion, given 10X’s expertise with retirement investment products.

Ready?

Having a retirement fund doesn’t actively secure your financial future.

You’re just creating a small pile of money one tiny contribution at a time, and hoping that it grows by hook or by crook (and if you bought Steinhoff shares once upon a time, it would have been the latter).

Ok, ok, no need for the angry mob yet. To ensure a comfortable future, you do need a solid base of traditional investments (and I’ll explain how to get this further down), but if you want to truly build generation wealth, you’ll also need to think about getting busy, and taking some risks.

That said, building wealth doesn’t necessarily mean building Amazon either. At its core, wealth building is about identifying opportunities and understanding how to leverage those opportunities.

Learn from the past, but live in the present

Investment opportunities are fluid, and new ones come along all the time. With new opportunities should come new approaches to identification and evaluation, but it doesn’t always seem to be the case. The last thing you want is to be stuck with an old attitude in a modern world. Today, you need to be open-minded and a little curious about what is out there in the world.

Imagine if someone had offered you 10 000 Bitcoin for your pizza a few years ago, would you have taken it?! Obviously, some examples are isolated cases that make for a good story. But the principle remains the same: opportunities need to be sought out, not idled towards. And most of these opportunities require a level of risk that we’re often cautioned against.

Risk is presented as more of a threat the older one gets, but the reality of building wealth is that understanding and mitigating investment risk is probably one of the biggest differentiators between achieving the goal and falling short of it. Age is meant to bring wisdom and provide experience, but that experience should not create a fear of risk. Rather, you should explore your risk tolerance as an investor. That doesn’t mean throwing money around left and right and hoping for the best. It means you should actively engage with opportunities in the world, and see how you feel.

With that in mind, let’s get into the nuts and bolts of building wealth.

Step 1: A good foundation

There is no magic formula here, and no fool-proof order of going about things. But, having a basic retirement plan and getting the must-haves right is critical to building a solid foundation. You’re then free to start adding the fun stuff without worrying about your financial Jenga tower falling. No brainers like:

• a cost-effective and performance-orientated Retirement Annuity and
• an equity-focused Tax-Free Savings Account

form a good foundation from which to diversify. Both of these products also provide great tax incentives, so not investing in them kind of doesn’t make sense.

Then, adding layers like Trust structures and sinking funds becomes offers an added layer of flexibility. A word of caution here though: do your research to understand the implications of new products and structures so that you don’t find yourself at a disadvantage.

Lastly, you can incorporate liquidity to enhance your flexibility. There is nothing more painful than not being able to take advantage of an opportunity because you have funds tied up. A measure of liquidity makes you agile and able to move at the right time.

Step 2: Before taking action, cultivate the right mindset

We underestimate the impact of good psychology on clear decision-making, particularly where it relates to investments. Many of us rely to large extent on the advice we are given by others. Perhaps to feel safer, or to escape the responsibility for bad decisions. And yet, some of the best things that happen in life are born out of learning from pain. So, avoiding it means avoiding the opportunity to do better next time. The key is to limit the downside, and keep the following top of mind:

Curiosity. Find out about things. Ask others how they are doing things. You may not always get an honest or helpful answer, but you will learn how to ask better questions in the end.

Bravery. Stand by your choices and see them through, all the way to the end. Even if that end isn’t the one you desired. Fortitude breeds resilience.

Relentless pursuit. In the immortal words of Ace Hood, hustle, hustle, hustle hard! The first opportunity isn’t likely to be the winning opportunity, but giving up isn’t an option.

See the reality. Understand that you’re probably not going to get to get all the decisions right. This doesn’t mean you’re doing badly; it just means that you understand it’s a long game.

Keep it simple, stupid. Sometimes less is more. You want to get into things you understand, not just what you are told to get into by someone else.

Step 3: Don’t throw the kitchen sink at anything

And here it is, the secret to building wealth over time: diversification. You don’t need to be a jack of all trades, but you do need to understand that spreading your risk increases your chances of finding a winner. Think of it like planting a garden. You don’t plant just one thing and hope it grows. Instead, you plant a variety of seeds—some flowers, some herbs, maybe an avocado tree. Not all of them will thrive, but the more you plant, the higher your chances of seeing something flourish. By trying different things, you not only increase your chances of success but also protect yourself—if one plant withers, others can still grow strong.

Step 4: Where is your network?

In the world we live in today, relationships are everything. Networks give you an edge when you are looking to tap into things you don’t have a lot of experience with, and having a wide network increases the number of opportunities that you are exposed to and creates leverage. You get to ask questions, and get expert answers. And you also get to discover things you may not even know existed.

Many of us might not have the luxury of old boys unions or corporate networks to build from, but that doesn’t mean this step doesn’t apply. The beauty of networks is that they can be built with just a single phone call. And because of their personal nature, they become one of the most powerful tools in the wealth-building arsenal. At the end of the day, we are all humans (for the moment), and the need for connection with other humans is wired deep.

Step 5: Fact finding, evaluation, and limiting the downside

Speaking as something of a perfectionist, this step can be a strange one to learn. It’s difficult to comprehend getting investments wrong, and losing money in the process. Ouch! But that’s the reality of life, you won’t get it right all the time. Try to think of it as buying experience that makes you better the next time!

So, when you start looking at opportunities, use the early stages as part of the learning process. Some useful tips to approaching this step of the journey include:

• Try out a smaller deal before you commit all your money to one big investment.
• Test out the deal against other opportunities to evaluate your risk-to-reward prospects.
• Send opportunities to seasoned investors in your network for them to give you their thoughts, especially if they are an expert in that field.
• Suggest to friends that they share in the deal with you. Their response is a good litmus test of the opportunity, and if they go for it, this will reduce your risk.
• Make the bad decision (just limit the downside). Experience is the best teacher and nothing teaches you like the pain of losing your own money.

Step 6: Mixing it all together

This may feel like the hardest part of the process - understanding how to bring all these pieces together. In reality, this is where time becomes your friend. Time, and repetition, and not giving up. Time will teach you how to begin to integrate these steps, while repetition will make the process seamless over time. Building the muscles, and then flexing them responsibly, is how successful investors can spot a good deal right away.

Step 7: Remember, it’s your financial life

At the end of the day, wealth is personal to each of us. For some, a comfortable life doesn’t necessarily mean owning a yacht in Monte Carlo. Building wealth remains about meeting your own objectives as much as it is about adding zeros to your bank account.

A final note: When is the right time to start?

Much like planting a tree, the best time was 50 years ago. The next best time is now. Start small; you’d be amazed at what eating an elephant one bite at a time can do. And don’t forget to build your base first. If you’re wondering if you’re on the right track, try speaking to a 10X investment consultant, they’re consulting for free at the moment.