8 Wealth Secrets the Government Doesn’t Want You to Know

Aren’t you curious why the rich keep getting richer and the middle and lower class keep getting poorer? It’s no secret there’s a huge wealth divide in America.

However, millions of people are educating themselves on wealth-building to escape the wealth divide and achieve financial freedom. So, here are ten wealth secrets the government doesn’t want you to know that you can start implementing today.

Disclaimer: Information is meant for educational purposes only. For tax and financial guidance, please seek licensed advisors.

#1 Aim to Have Assets, Not a Job

The rich don’t become wealthy by having a job where they work their way up the corporate ladder. In fact, the rich are actually unemployed.

The rich don’t become wealthy by having a job where they work their way up the corporate ladder.

How is this possible? They own assets such as real estate, businesses, and investments that produce consistent cash flow, allowing them to make money without trading their time for it. For example, a wealthy person might buy a business. That business puts money in the rich person’s pocket without physically working for that money.

Best Cash-Flowing Assets for Building Wealth

Online Businesses

This one is more active than the others, but it can still provide you with cash flow. For example, let’s say you own an agency specializing in social media management for businesses over 100 people. You’re still an active member of the organization as the boss, but your employees take care of day-to-day operations.

Real Estate

Real estate is great for generating cash flow because you make rental income from your tenants each month. Plus, you can hire a property manager to manage your properties.

Digital Courses

Digital courses require up-front work, but after they’re finished, you can make passive cash flow every time someone purchases your course.

Stock Market Investments

You can put your money into low-risk funds, such as index funds, where you don’t really have to manage them or hire a broker to invest your funds for you. Either way, you can generate passive cash flow each month, which has the potential to compound over time.

#2 Anybody Can Legally Reduce Their Taxes

Many people like to say, “Tax the Rich,” but don’t understand that the rich know how to legally reduce their taxes.

An example would be owning real estate investment properties. The rich can’t write off the entire property. However, they can write off mortgage interest, property tax, property management, repairs, and depreciation.

Because the poor and middle class do not have this financial knowledge, they don’t get the tax benefit. However, anyone can learn the tax code and reduce taxes simply through self-education.

Many people like to say, “Tax the Rich,” but don’t understand that the rich know how to legally reduce their taxes.

Examples of Common Tax Reductions the Rich Use

Charitable Donations

Have you ever wondered why the rich donate to charities all the time? Sure, they may care about the cause but also about reducing their taxes. Every time a wealthy individual donates to a charity, they can deduct their donation from their taxable income.

Property Taxes

Rich people typically own several properties, and each of these properties gets taxed. However, they can write off those property taxes from their taxable income, reducing their overall taxes.

Depreciation

Land or machinery decreases or depreciates in value over time. A rich person who owns land or machinery personally or through their business can deduct the reduction in value from their taxable income.

Business Expenses

Rich people can deduct any ordinary or necessary costs their business accrues, such as rent, inventory, and payroll.

Investment Income

Over time, your investments produce income. A rich person can deduct that income from their taxable income, reducing taxes.

As you can see, the more assets you own, the less income goes towards your taxes.

#3 Owning Real Estate is the Key to True Wealth

Real estate increases in value year after year, especially during inflation. Currently, in the economy, housing prices have skyrocketed. The higher prices are hurting the poor and middle class.

However, the rich love the higher prices because they make more money on their investment properties. For example, owning a rental property that goes up in value means the rent goes up. So, for each rental property, a rich person owns, the rental income increases, bringing in more money for them.

#4 Use Debt to Achieve Wealth

One of the most powerful wealth secrets is using debt to make money. In the book, Rich Dad, Poor Dad, Robert Kiyosaki talks about how the rich never spend their own money. They use other people’s money, or OPM, to purchase assets.

For example, rich people use other people’s money to buy investment properties. They do this by raising capital, or cash, through hard and private money lenders, FHA loans, and peer-to-peer loans.

One thing to remember is that using other people’s money isn’t free. You have to pay them back with the money you make from your investment. However, if it’s a good investment, you’ll have plenty of money to pay them back and keep the rest for yourself.

One of the most powerful wealth secrets is using debt to make money.

Other People’s Money

Small Business Loans

You may qualify for a Small Business Loan (SBA), which provides funding to start your business. As your business generates money, you can pay back the loan.

Rental Real Estate Properties

After you put a down payment down on the property, the other money comes from the bank. As tenants pay rent, you use that money to pay back the bank and keep the remaining profits. In addition, you can write off the interest from the loan as a tax deduction.

Silent Partners

Silent partners are individuals who provide the capital to fund your business but let you handle all the dirty work. You both share the profits once the business makes money.

Angel Investors

Angel investors provide funding for your business in exchange for equity. They might also provide advice as you scale your business. This method works well for people who have already established their businesses but want to scale to increase their revenue.

#5 Pay Yourself First

To secure your long-term financial future, you must pay yourself first. Paying yourself first involves setting money aside each month for savings or investments.

Instead of paying yourself by putting the money in your spending account, you’re putting that money away to build your net worth. Paying yourself first removes the temptation of using that money to spend, forcing you to rely on discipline instead of immediate gratification.

#6 Investing and Compound Are Powerful Wealth-Building Tools

Wealthy people heavily rely on their investments to build generational wealth. They commonly invest in long-term accounts such as index funds and Roth IRAs. Investing in these investments is an excellent investing strategy because they are passive and grow slowly over time, mitigating risk.

Index Funds

Index funds track the returns of a market index, such as the S&P 500 or the Dow Jones.

Roth IRA

A Roth IRA is a retirement investment account where you can contribute up to $6,000 after-tax dollars that grow tax-free. So, when you’re allowed to take the money out at 59 1/2, you won’t be taxed on it.

#7 Continuously Study Financial Literacy

The key to building and maintaining wealth is understanding how money works. You always want to be studying financial and economic concepts. For example, Warren Buffett spends around 80% of his day reading newspapers, books, and online articles.

Reading a lot is what differentiates the rich from everyone else. They keep their brains active by constantly learning and exercising their brains, allowing them to continue building wealth.

Financial Literacy Resources for Building Wealth

• Books
• Online Courses
• Live Events
• Online Articles and Magazines
• YouTube

#8 Making Mistakes is a Good Thing

During our education years, we are constantly told to avoid mistakes or we’ll get punished. However, humans learn by making mistakes. Mistakes teach us what works and doesn’t work, allowing us to improve our processes.

We are taught that failure is bad and decreases our worth. However, failure is a tool that teaches us how to push through setbacks and figure out better ways of doing things.

Final Thoughts

Building wealth takes a lot of time and discipline. However, implementing these tips may help you learn how to grow your wealth and achieve your financial goals.