Leverage: The Key to Wealth
Leverage occurs when you have money working for you or people working for you. You begin your work life by trading your time and effort for money. A part of all you earn is yours to keep. If you set aside, say, ten percent of your income for future expansion, you begin to create wealth. In ten months you accumulate the equivalent of one month’s salary. In five years, you would accumulate six month’s salary. In fifty years, you have six years of salary. We measure wealth in time before the assets run out. Assuming you could afford to live on half of what you were earning previously, you have twelve years banked.
I just described the forty to fifty plan. You work 40-50 hours each week for 40-50 years of your life so that you can retire on 40-50 percent of what you were previously earning.
Ask yourself: How are you being paid? Who had the money to pay you? Why would he or she do that? You struck a bargain to provide useful labor in return for the money. Is that all you are worth? Probably so, initially. As the value of your labor increases, so should your earnings.