If you want to build the greatest amount of wealth possible in the shortest amount of time possible, then you’ll need to create a wealth-building engine.
That’s because the best way to approach anything is to systemize it. The more you systemize your strategy, the better the results you’ll receive. This is true for every form of wealth building throughout time.
Let’s look at a handful of case studies, examine the root strategic theory behind why they work, and then look at some examples of wealth-building engines that you can build in the next few years.
NOTE: I have personally used several of the engines below to build wealth automatically. I’ve applied the concepts in this article to build multiple 6-figure wealth-building engines in completely unrelated industries, ranging from real estate to oil, media, and others. Good strategic theory works.
1. Case Studies: Wealth Systems Work
Henry Ford built the modern assembly line, revolutionizing manufacturing with the Ford Motor Company.
Sam Walton built one of the greatest bulk physical retail logistical machines in history with Wal-Mart stores.
Jeff Bezos did the same – but for ecommerce with Amazon.
Show me a business success story and I’ll show you someone who built a repeatable, scalable business system and then just applied it to the right market opportunity.
The more systematic your business, then the better the output will be. If you find yourself stuck working inside your business, chances are you haven’t built the right systems yet.
In the classic entrepreneurial book “The 4-Hour Workweek”, Tim Ferris explains how the typical person can create a simple, small business that can transform one’s life.
Warren Buffett built an investing strategy and stuck with it – rigorous discipline, safely leveraged purchases, and purchasing stable long-term businesses at affordable prices built one of the greatest personal fortunes in history.
Buffett didn’t just treat every day like a new day where he’d try to pick the best stock – he made his investment selection part of an elaborate process where he would know exactly when and where to invest his money, period.
The same principles apply to every investor.
For example, the classic personal-finance book “The Automatic Millionaire” explains how the typical person can take these same principles of focusing on systematic saving and investing and become a millionaire automatically – even if they make very few other good decisions.
If anything, the most basic wealth-building system nearly guarantees you’ll become wealthy over time.
In the book The Clipper Ship Strategy, author Richard Maybury explains how
2. Strategic Theory: Rules to Follow
- Follow the 2 Rules. No matter what, you should always follow the two rules. There’s essentially no situation where you shouldn’t focus on the two rules constantly – day in, and day out. You can read more about the two rules here.
- Find a Wealth Flow. A wealth flow is essentially a large stream of money in the economic ocean that is flowing from one group to another. For example, if interest in health and fitness is increasing, then you can be sure that the flow of money from people who want better fitness is flowing to people who are helping provide it. Some wealth flows might be short and sudden, like a gold rush. Others might be strong and steady, like the need for affordable rental properties in a growing community.
- Find a Cheap Entry Point. This is critical. Never gamble a large sum of money when you’re first starting your wealth-building engine. Any opportunity that requires a huge cash gamble is the wrong kind of gamble. You want to be able to cheaply test out a possible strategy before trying to scale it.
- Find a Strategy to Scale. When you’ve found a cheap entry point, find a way to scale it – sometimes this means just doing it over and over, sometimes it means hiring someone to help you, sometimes it means just picking the right industry. But no matter what you do, spend a large amount of time focusing on how to scale your engine. A small engine is inherently less profitable overtime than a larger one that is still efficient.
- Find New Leverage Points. Once you build your engine and it’s humming along smoothly, find little ways to tweak it so that it’s more efficient over time. I like to find one new leverage point every single month.
3. Examples: Engines You Can Create
Most people don’t like to read “theory” because they feel like it is just fluff wasting their time. These are generally people who end up working exponentially harder than they should for a fraction of the wealth they could have generated.
Theory is everything. The right theory can make you rich. The wrong theory can break you. Still, let’s look at real-world example applications you can use in your own life.
- Automatic Investment System. This is one that nearly everyone in the personal finance community uses. It’s pretty simple: you build an automatic, simple portfolio, pay yourself first, and use the cheapest, lowest-fee funds. If you do this, you’ll almost certainly have millions by the time you want to retire. You can start with a hundred bucks.
- Rental Property Empire. This is a popular system that I’ve come to love. If you build the right system for finding and buying rental properties, the results can be alarmingly powerful. For example, it’s not impossible to build an efficient little rental-property empire that has an internal rate of return similar to Warren Buffett’s career. It sounds outlandish, but it’s true – with some (obvious) limits.
- Niche Ecommerce Empire. This is a lucrative wealth-building model that has only been around a couple of decades. Basically, you find something to sell, find a way to sell a lot of units, and then do the same thing over and over again with similar products – piggybacking on your own success. This is DRASTICALLY easier to do than most people realize. Once you see how accessible this model is, you’ll never see anything in a store the same way again.
- Career as a Business. Whatever you are paid to do for your job, you can probably find a way to do it as a business – either directly or indirectly. Do you have a marketing job? You can have a marketing agency. Do you drive a truck? You can start a transport business. Do you work at a hospital? You can create niche health services. I’ve yet to meet a high-skilled worker who didn’t have business options that were life-transforming.
- Career as Private Equity. Whatever you are paid to do for your job, you can probably find a way to buy a business in your industry. Do you manage a gym? You should look into buying a gym. Do you work as an accountant? You should look into how to buy a bookkeeping or tax-service business. There are countless businesses for sale at crazy-cheap prices and you probably have more access than you realize.
I can’t stress enough how important internalizing the concepts in this article are. Over time, I’ll be going through and creating more and more articles on every one of the points mentioned above.
Your Own Wealth-Building Engine
To create your own wealth-building engine, follow the wealth-building engine principles, apply them to your own situation, then continue to work on optimizing your engine over time. This will pay massive dividends – literally.
Just remember: chances are, a wealth-building engine that takes you from your current position and puts you in the 1% is likely drastically more accessible than you realize.
In Hosea 4:6, it is written, “My people are destroyed for lack of knowledge.” This rings true for most people in our modern economic system.
Prosperity is accessible, if you just know how to access it. That’s what financial strategy is all about.