How to Build Wealth: The 5-Year Plan vs. the 25-Year Plan
Building wealth is something many people aspire to achieve, but not everyone knows how to do it. In this article, we will compare two different approaches to building wealth: the 5-year plan and the 25-year plan. We will also discuss the importance of understanding the power of compounding and the drawbacks of the traditional 25-year plan.
The Power of Compounding: Mr. Beast and Grant Cardone's Secret
Mr. Beast and Grant Cardone are two successful entrepreneurs who share a common strategy: reinvesting profits into their businesses. Mr. Beast used this approach to become one of the biggest YouTubers on the planet, while Cardone used it to become a billionaire in real estate.
The key to their success was taking the profits from every video or property they made and investing that money into the next video or property. They did this repeatedly, allowing their businesses to grow exponentially. This is the power of compounding, and understanding it can change your life forever.
The Traditional 25-Year Plan: A System Designed to Keep You in Debt
The 25-year plan is the system that banks want you to follow. It's a plan that keeps you in debt, enriching the banks through the power of compounding. The plan is simple: work hard, climb the income ladder, and spend all the profits of your labor on upgrading your lifestyle. Buy better cars, houses, holidays, clothes, and toys.
The messaging is constant, and the banks entice you to buy all of this stuff on credit and pay interest on top of what you would normally pay. The banks generate profits from your labor over a 25-year period and use those profits to create new assets or customers. You remain an asset for the bank, and they control your income.
The 5-Year Plan: Building a Business for Residual Income
The 5-year plan is different. Instead of upgrading your lifestyle, you invest all the profits you make from your labor or business back into the business. You aim to move from a small, simple house to a very large one in one step. You focus 100% on your business, and everything you do is focused on growth.
The aim is to create residual income from your business profits, and you invest everything you can to improve your business output and profitability. You can invest in employing or training new staff, buying better equipment, exploring new business opportunities, getting better skills, and training yourself to do something you don't currently have the skills to do.
The Benefits of the 5-Year Plan
The 5-year plan allows you to compound everything in your favor, not in someone else's favor. The time cost for the 5-year plan is five years, and if you can achieve it, you can rinse and repeat every five years. The goal is to have enough cash to buy your dream house and live your dream life.
Building your Dream Life: Step-by-Step
Step 1:
The first step to building wealth through the 5-year plan is to start your business. This is the biggest priority in your life. Find a business, learn how to set it up, learn how to run it, and create it.
Step 2:
The second step is to sort out your living arrangements. Find a living space where you can live as low cost as possible, where you can work on your business, and invest the profits back into your business.
Step 3:
The third step is to work towards and build your dream house and dream life. Reinvest your profits, look for any opportunity to grow the value of your business and the assets you own, and all the time, focus on that dream life. Practice deferred gratification and live simply.
Conclusion:
The power of compounding can truly change your life forever. By applying the principles of the 5-year plan and focusing on building a profitable business, living simply, and investing profits back into your business or assets, you can achieve your dream life and become free from the burden of debt. It may take time, effort, and discipline, but the results are well worth it. Take inspiration from successful entrepreneurs like Mr. Beast and Grant Cardone, and start your journey towards financial freedom and living your best life.