How to Build Your Financial Orchard

Hi Reader,

Welcome to The Money Series, and if you are new here, thank you for signing up. Personal Finance can feel ambiguous and overwhelming, but I am here to help simplify the journey.

Imagine a tree that continuously bears fruit. Now, envision planting and nurturing several of those trees, harvesting their bounty, and stocking your kitchen year-round. In the world of personal finance, these "trees" can be likened to appreciating and income-generating assets. This is exactly the reasoning behind how some of the wealthiest individuals manage their finances.

Have you ever wondered how the top 1% maintain their enviable lifestyles without appearing to work harder than everyone else? The secret isn't just about earning more, it's about how they deploy their earnings. The wealthy prioritize acquiring assets that grow in value or generate income, then let those assets fund their lifestyles. Their salaries aren’t for splurging; their investments do the heavy lifting.

This approach isn’t about deprivation. It’s about purposeful, strategic accumulation -building a system where your money works for you, not the other way around.

Most people trade time for money, then spend that money on things that lose value. The wealthy take a different path: they invest a significant portion of their income into assets that appreciate or pay regular income. These assets (real estate, stocks, ETFs, bonds, and alternative investments) are the engines that power their financial independence. Every asset in their portfolio serves a purpose: their home brings comfort (and sometimes, appreciation), investments offer growth and income, the rental property generates cash flow, and the cash reserve (emergency fund) provides peace of mind and flexibility to take advantage of new opportunities.

Understanding the Difference: Appreciating Assets vs. Depreciating Assets

Appreciating assets are the foundation of wealth. Some appreciate. Some provide income. Some do both. Depreciating assets, on the other hand, lose value after you buy them. A new car loses value the moment you drive it off the lot, and the latest iPhone can be reduced to half its value in a year. Buying depreciating assets using borrowings is even doubly damaging; you pay interest on something that’s losing value.

Want to Build Like the 1%? Start:

☑️ Prioritising savings and investments. Live below your means and channel the difference into appreciating assets.

☑️ Delaying Gratification. Delay a non-essential purchase to free up funds for investments.

☑️ Asking yourself: “Will this purchase build my wealth or drain it?” before you spend.

☑️ Invest windfalls. Got a year-end bonus or an unexpected income? Invest it and then use the returns to splurge.

☑️ Building passive income streams. Income sources that don’t rely on your time.

Start today by reviewing your own asset allocation. Prioritize investments that grow in value or generate income. Limit spending on depreciating assets and manage liabilities carefully. The "Own First, Spend Later" philosophy is a powerful framework for building lasting wealth. It encourages you to think like an investor, not just a consumer.

Reflect on This:

• Of your discretionary spending in May, what proportion went towards appreciating assets vs depreciating ones?

Reply to this email if you have questions on how to get started.

Till next week, I am rooting for you, money-ly!

Dee

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Disclaimer: This does not constitute financial advice. Please conduct your research or consult your financial advisor for important financial advice.