Somebody always seems to know more than you do when it comes to investing your money. Expressing even the slightest interest in doing so will cause you to receive a whole bunch of unsolicited advice by people who are sure that they know what’s going to be The Next Big ThingTM. Logic would reveal that these people don’t really know what they are talking about, because they aren’t even remotely close to being truly wealthy. Everybody seems to have an answer, but few people have the results to back up their assertions.

It’s easy to tell people how to invest when it’s not your money being risked. When your own finances are at stake, all of a sudden you find yourself analyzing every investment a little more closely. It’s easy to be fooled by promises of quick riches; casinos, stock brokers, and property managers have secured (and suckered) many people over the years by convincing them that they have to spend their money NOW or risk losing out on ultimate wealth. If you are motivated by the desire to get rich quickly, you have already started off on the wrong footing.

I have to invest to be rich – I can start with  $1 as a child. I do not have to be rich to start investing, but I have to start investing to be rich.

Investing your funds in a way that will pay dividends for years to come requires you to be judicious, discerning, and most importantly, patient about what it is that you are investing in. “Investing” your money in lottery tickets is a great example of something that is none of these things. The risk of loss is extremely high, the odds of earning your money back are nearly zero, and people routinely ignore all of these things because they want to get rich quickly. If you consider the kind of mindset it takes to think that lottery tickets are a good investment, it’s no wonder that many lottery winners wind up bankrupt within a few years.

Don’t look for instant payoff when investing money. Creating wealth is a slow and methodical process that continuously builds upon itself over time. Your initial investments will be relatively small, but these will generate a consist cash flow that will allow you to parlay your earnings into bigger, better investments. The assets you own that will generate cash flow are known as capital. Bradley Sugars’ newest book, The Wealth Coach, combines the twin forces of cash flow and capital under one roof: the Money House. The foundation of the Money House is built upon by passive income, its body consists of cash flow and capital, and its completion leads to the creation of true wealth.

When deciding how to invest your money initially, find activities and assets that will continue to pay off in the future and generate additional cash flow. For example, property is considered to be a popular investment. But is it really? If the value of your house goes up, great! But what happens if its value suddenly collapses? Now you have lost a lot of money on it, and you have to continue spending money to maintain it. It’s not an asset anymore, is it? It’s now a liability. Assets feed you, while liabilities eat you.

Think in terms of the Money House. Your path to true wealth requires both capital and consistent cash flow, and obtaining both of these requires that you invest your money properly. Ask yourself these questions: what kinds of investments will feed you? What assets will generate cash flow rather than cash drain? This is where careful investment and research comes into play. Stocks and property are popular examples of investments, but their value is unpredictable at best. Savings bonds and accounts are much safer, but they generate a very low level of positive cash flow. Businesses are reliable assets, but they will take many years to reach the point where they generate large amounts of positive cash flow.

order the wealth coachI will close off by telling you that the key to wisely investing your money is to divide to multiply. The Wealth Coach uses this phrase to refer to the diverse portfolios that wealthy people curate in order to maintain the virtuous cycle of cash flow and accumulation of capital. Having a combination of high-liquidity and low-liquidity assets is the key to kick-starting this positive feedback loop. People seldom become wealthy through one type of investment. The Money House is not built upon a single foundation, and if you don’t divide your assets, you won’t be able to multiply your capital.

Brad Sugars is the world’s leading Business Coach and leads the world’s number one business coaching firm, with more than 1,000 coaches in 73 countries. Every day, the coaches at ActionCOACH help tens of thousands of business owners grow their companies with hundreds of simple yet powerful business development techniques and strategies.