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N is for Net Worth – The Elite Investor Club’s A – Z Guide of Investing

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To join the Elite Investor Club go to – http://www.eliteinvestorclub.com/ Welcome back to the A-Z of investing. We’ve reached the letter N and if one episode sums up why we’ve produced this entire series it’s this one. Because everything we teach is designed to increase and protect your letter N. N stands for Net Worth. When I speak to successful professionals and business owners it often amazes me that they don’t know what they’re net worth is. If you don’t measure it regularly, don’t be surprised if it doesn’t change much. My personal goal is to increase my net worth each and every month. Guess how often I measure my net worth? That’s right, each and every month. Do I always achieve my goal? No. Do I achieve it more often than not? Yes. Because I’m focused on it. How do I keep on increasing it? By taking actions designed to increase my income or my equity. If I make my business one pound a year more profitable, I add a pound to my income stream. But I also add three pounds to my net worth, assuming a very modest three times profit valuation of my business. I think of it as current bank and future bank. Current bank is this year’s income, which I can save or spend. Future bank is long term value growth typically expressed as equity in ownership of assets such as property, income generating shares, bonds and loan notes and of course businesses. So how do you measure your net worth. That nice Mister Gates has given you everything you need in a little tool called Excel. First, make a list of everything you own. Your home, any investment properties, ISAs, bonds, businesses and so on. Label the spreadsheet my Net Worth and today’s date. Then, make a list of everything you owe such as mortgages, bank loans, credit cards, leasing agreements and all the rest. Subtract what you owe from what you own and hopefully you’ll see a positive number. But don’t despair if it’s small or even negative. The critical point is that you’ve started measuring it. Now, have a think about what you could do in the next thirty days to increase your net worth. The place to start is in the What you Owe column. Anything like credit and store card debt that’s not paid off each month needs to go first. Remember, reducing your debt by a thousand pounds increases your net worth by a thousand. When all the bad debt is paid off, then saving and investing can begin. Have a look at plainenglishfinance.co.uk and Andrew Craig will guide you through getting started with things like ISAs so your investment returns can be tax free. Can you start a part time business? It’s never been easier and it’s the ultimate way to create significant wealth in a relatively short time. Remember it can put cash into your current bank but also put equity in your future bank. Set yourself some net worth targets, maybe starting with simply reaching a positive number. Whatever your starting point, aim to increase your net worth in ten months out of every year. Just having that degree of focus will make this a self fulfilling prophecy. It’s an old cliché that what gets measured gets managed. Like most clichés, it turns out to be true! So, create you’re my Net Worth folder and create an updated spreadsheet every thirty days. Think in terms of reducing your debt, increasing your income, creating businesses and acquiring assets. Celebrate each target that you achieve. And see how much more relaxed and confident you become as you start to expect to become worth more each and every day. In the world of wealth creation and wealth protection, there’s no number more important than your net worth.