It’s been a while… The Months of Aug and September has been characterized by a lot of activities for Gold Avenue Africa; Golden Circle and Gold Finance Academy subsidiaries taking our Financial Literacy discipleship to various regions outside Nairobi as well as the launching of Satellite classes respectively.
The conversation of Generational Wealth Creation has always been there but for the minority of the population. It’s what the Wealthy (5%) of the global market leave in their generation, not for their generation. What could this 5% of the Population do?
In the ecosystem of investment, statistics has it that 5% of the population contributes to 95% of the world’s wealth. This population largely participate in the Capital Market and involves the creation of infrastructures that are long-term and revolutionary. The remaining 95% of the population, on the other hand, contributes to only 5% of the world’s wealth and they participate in the Labour market consisting of the provision of Goods and services thus short-term and prone to disruptions.
Here are 9 Nuggets that the wealthy pass to their children:-
1. The wealthy teach their children how money works (Financial Literacy): Learning the difference between Asset and Liabilities in practice beyond the aspect of theory. The aspect of Cash Inflows and Cash Outflows (What is coming in and what is going out) that cash is not king, Cash Flow is. Teaching them that there is a difference between the Fruit and seed and showing them the importance of separating the seed from the fruit for saving with the intention to multiply it through investment.
2. They teach them to be Sociable: The Wealthy teach their children to be Sociable, teaching them human language which brings the aspect of being relational before being transactional. They know relationships creates an opportunity to understand the needs of others and offer value most important to them.
3. Long-term game: The wealthy recognizes wealth creation is a long-term game. They therefore teach their children not to expect quick results which breeds immature executions or giving up too easily. They do long-term plans while executing through short-term while the rest think 30 days plan per time.
4. Guides them in creating habits that bear long-term dividends: They train them on the importance of progressive learning. The poor pile up education but do not execute. The wealthy learn and execute through creation of enabling habits. They believe in becoming a person of value that in turn attracts wealth through discipline execution of this learned enabling habits.
5. Money is just a tool: The wealthy enlighten their generation on being indifferent about money that helps them to be objective in money-related decisions. Here are two participants; you and the money for a mutual benefit end result. They teach them that value creation precedes money- Money is a result; a tool of reward.
6. They insist on the Strategy of Increasing income instead of lowering expenses: The wealthy talk of Grow your means the poor talks of spend within means. “Increase your income grow your means as they come from an environment of more than enough. Increasing income is possible when one adopts passive income-generating investments that do not require the person to be present to earn.
7. They understand the 3 quotients that ensure sustainability of Wealth; IQ, EQ, and AQ: Sustainable wealth creation comes from a proper combination of IQ, EQ, and AQ. Most people think with IQ they are good to go and therefore put more to education as IQ comes as the ability to learn and understand things. However, this takes up 20% according to psychologists. The other two EQ & AQ takes up 80% collectively. EQ is the ability to understand and manage one’s emotions as well as those of others and responding to them effectively. It’s said, IQ will take you to the King, and your EQ will keep you there.
Then there is AQ (adaptability quotient): evolve or die! It is the aspect of being adaptive to change, being able to face and overcome change or even adversity.
8. Bad Debt versus Good Debt: The wealthy teach their children that there is bad debt and good debt. Bad debt is basically debt meant for consumption, unnecessary credit card debts that brings nothing in return while good debt is debt meant to acquire income generating assets which will eventually pay off the debt in full and continue generating income for them.
9. Understand Leverage OPM & OPT: Wealthy people engage their children in learning the power of Leverage. In simple investment terms, OPM (Other People’s Money) is based on the fact that, you do not have to own but you can access. Creating of Infrastructures require huge amounts of investment and through leveraging on Other People’s Money by being a participator in a Multiplication company that is achieved where there is the collective pull of Fund. OPT (Other People Time) is based on the use of other people’s experience, intelligence, energy etc as you do not have to be the expert but can engage a multiplication company to do the Investing, use their expertise to deliver a return on your investment.
** Gold Avenue Africa, besides being a multiplication company, is passionate about Financial Literacy. Our Next Class of investors begins on 17th Nov 2018. Get in touch with us by registering on our Gold
Finance Academy online subscription.
** In that spirit of providing Financial Literacy to generations and Progressive Learning for both our
Class of Investors Alumni and other passionate learners. Gold Avenue Africa, through its subsidiary
company Clean Money Media has two functions:-
i) Content Development.
ii) A mobile subscription service for progressive learning.
We launch this during our Upcoming Open Day Nairobi on the 10th Nov; register online to attend (Free