Jaspreet Singh focuses on three rules.
When asked what the most important thing is to build wealth in an exclusive Q&A with GOBankingRates, he replied, “There are only three steps. First, you need to spend less than you earn. Second, you need to work to make more money. And third, you need to invest the money you don't spend.”
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On his YouTube channel Minority Mindset, the lawyer and entrepreneur goes a step further and breaks down the third wealth creation rule into three parts each.
He said, “If you really want to never worry about money again, you need three different kinds of investments. You need investments that give you income. You need investments that grow your wealth. And you need investments that protect your money.”
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There is no income as much as real estate rental income.
Singh prefers real estate to dividend stocks and other income-producing assets. With management services, you can turn your property into a “pretty passive” source of income without having to act as a landlord, he said.
Whether your building is residential or commercial, a renter puts some money in your pocket each month while paying your mortgage and covering taxes, insurance, and other expenses.
He also likes that real estate investors receive “the biggest and best tax breaks our tax code offers.” With just one property, he can “make a lot of money and legally pay very little in taxes,” Singh said of the “minority mentality.”
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Invest in your business and grow your wealth
Mr. Singh buys real estate solely for the purpose of monthly cash flow, so he does not take into account the potential for appreciation in real estate investments. His goal is 7%. He invests in companies for growth. Because he can reinvest profits to increase the value of the company.
“There are different ways to invest in a business, depending on your risk tolerance,” he said.
The least risky way is to invest in the stock market. While it is possible for a publicly traded company to go bankrupt, it is much less likely than a small, unproven start-up company.
The next level is to invest in startups that are actively raising capital in exchange for equity. This is riskier, but offers greater growth potential. “This is what happens on 'Shark Tank,'” he said.
The riskiest option is to invest in your own business. Singh says, “When you invest in your business, you are investing in yourself, and at the end of the day, you are the best investment you can make.”
But for entrepreneurs to succeed, they need to put everything they have into their business, and the risk of failure is high.
When all else fails, owning gold is a good idea
The third and final investment type that Singh recommends is defensive in nature, buying physical gold to protect against losses and economic uncertainty.
Singh said gold can protect your wealth during stock market crashes, business distress, falling real estate prices and general economic downturns. For example, gold has an inverse relationship with the US dollar, so when the value of the dollar falls, the price of gold rises.
Recent history also supports that it's good to own precious metals when prices skyrocket.
“Gold is a traditional inflation hedge because it has been used as real money for centuries,” he said of the “minority mindset.” “Whether you're in India, China, Mexico or the United States, everyone knows the value of gold.”
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This article originally appeared on GOBankingRates.com: Money expert Jaspreet Singh: Get rich through these 3 investments
