- Hello, YouTube.
My name's James Sinclair and in this video
I'm gonna share with you the foundations of wealth
that I believe entrepreneurs should be following.
If you're new here, make sure you hit subscribe
and hit the notification bell
if you like this sort of stuff.
I'm James Sinclair and I'm gonna walk you through now
my fast pounds and slow pounds belief.
It really is the foundation of my business thinking
of how I've built up my business.
And I wanna really share it with you.
There is a difference between income, cash flow,
and wealth creation.
I think people are at odds with what they should
be doing with their income to really build serious wealth
and there is some clear differences.
And I use those clear differences by explaining
these two little fellas up here.
The fast pounds v. the slow pounds.
This game is where wealth is created.
In making sure you have enough slow pounds around you.
This might all sound quite complicated if you're American,
well you can just change it to fast dollars
or slow dollars.
And if you're in India, fast rupees and slow rupees.
Now there's four ways to wealth, gang.
Number one is income.
That being cash flow, salary.
Number two is assets.
Just gonna write these up here for you.
Number three is business.
And this really is, after so much research that I've met
other entrepreneurs, read loads of books,
read the Financial Times, read the Sunday Times'
get rich quick, what's it called, the rich list
that comes out every single year.
And number four is marry, death, and divorce.
M, D, D.
Marry, death, and divorce.
These are four ways of how you can become wealthy,
build something that you can leave to your kids,
to your family, to make you financially secure as they say.
Number one's income so this would be salary.
Number two is assets.
Number three is business.
Number four is you can marry someone,
someone that's dear to you dies and leaves you millions
and gazillions of pounds.
And number three is divorce.
And I have really found plenty of people that have become
seriously wealthy from the M.D.Ds but,
because this is an entrepreneurial channel here on YouTube,
this is a business growth channel, we're gonna get rid
of number four because that's by chance if you like
or some people might say people marry by choice but
we're gonna leave number four off and we're gonna focus
on the top three.
Number one, income.
The problem with income is what I call fast pounds.
In most people's situation, income or salary comes in
one month and goes out the next month.
They've got their rent, they've got their mortgage,
they've got food bills, normal bills, pay for their car,
something goes wrong.
So what happens with this fast pound?
Although it's coming in fast, it usually
leaves the bank out fast.
Very much like the cash flow in a business.
Speak to most entrepreneurs, loads of cash flow comes in,
plenty of cash flow comes out.
One of my favorite phrases one of my
good business friends talks about running his business,
I'll say, how's business going?
And he always says,
"I'm professionally moving money around."
And that's what income can feel like to lots of people
as their collecting their salary.
They're professionally moving money around.
Cash flow in a business, professionally moving money around.
The next stage is assets, so this would be
stocks and shares, property, real estate,
and this I call slow pounds.
Now the difference is, to make money from assets,
you need to hold on to it for quite a long time
before it really starts generating cash.
I always say property is 10 years
before it really starts building you wealth.
So that is quite a slow amount of time to income
which comes in, you get a job, within 30 days you're paid.
Or you do a job for a business, you get paid,
so it's coming in much faster.
Assets, property, stocks, and shares, they start building
the value of a business, starts building over assets.
You need to own shares, property,
shares in your own business, that would be your assets.
Number three is the big one, business.
Business, you can really build fast income by the amount
of effort that you put in.
So this is what I really want people to understand.
You want to get into this 50/50 living.
50% of your income gets invested into slow pound assets.
Let's talk about that in real terms.
So, 50% of your fast pounds, your salary, the income,
the profit that you have, you then invest into slow pounds.
So that you have this scenario.
Your income, your fast pounds is invested into slow pounds,
and then over a period of time,
those slow pounds build assets and wealth
and they start sharing off dividends via increased rent,
via profits and dividends from the business,
and then you live off the income here.
Where as most people, live off the income up here,
from their fast pounds.
So it's really important that then,
we start falling through.
Well, how can we do this?
I can't, you know, if your earning 20,000 pounds a year,
30,000 pounds a year, 40,000 pounds a year,
then we can't invest 50% into assets
because I need all the money for my living.
I've got three kids, you know, they expect a holiday.
Oh, they expect to go to private school.
I need to buy a car or I need to buy a house,
my mortgage is stretching me to the -nth degree.
I can't do it.
Well that's why business is the secret
to building fast wealth.
And when I say fast, I'm sortin' ten years.
If you bought a business, you can massively increase
your income by your efforts.
When you get a salary it's very hard to grow that salary
if that's the sort of person that you are.
Or if you've got a small business
like a profitable job business like being a one man band
like a plumber or an electrician.
So you either need to be the top of a company, like an M.D.,
to be able to invest or you need to be, you know,
the marketing director or the CEO of a big company
to be able to invest into assets.
The game is, gang, we have to invest into slow pounds.
The business gives us a chance to put cash into assets
so that the assets allow us to fund the fun
and generate the things that we wanna do in life.
So you wanna buy a holiday?
You wanna go on a nice holiday or you wanna buy a nice car?
Needs to be bought out of here, not here.
If you can do that, your life will change dramatically.
Assets must fund your fun in life.
You wanna be, you know, giving as much of your income
into assets that you can do this process
of income, fast pounds, being invested into slow pounds,
50% of your profits or your personal income,
and then live off of the cash
that the slow pound assets generate.
See, like, when you buy a house, you know, you buy a house
for, you know, year one you buy it for 100,000 pounds.
Now roughly in the U.K. property doubles in value
every 10 years.
So in 10 years time, it's now worth 200,000 pounds.
The great news is, that increase in value,
you don't pay tax on until you realize it, i.e you sell it.
But, in that 10 years, you would have had rent increases.
Fantastic.
You would have paid down some of the property
or if you're paying down the property,
then you've got all of this extra cash flow.
Now you got two choices then.
You can either go and buy another property,
re-leverage it, mortgage it out and buy another one
once you've got more cash.
This is the ability that assets give you.
How can we leverage our slow pounds
cause that's the real trick to it.
Now you understand the thesis of it, but some people
are much better at the leverage game than others.
What does leverage mean?
I mean, for example, if I've got 100,000 pounds,
I think I will invest it better than most people,
not everyone because there's other people better than me.
Because I know some stuff cause I've research,
I've read some books, I've watched some videos,
I've been to some seminars.
So you wanna be leveraging your money
at the best possible return on investment.
And you wanna do this of at least 20%.
How do you work this out?
Well this is how you do it.
You get your gross profit or your cash flow from a property
or your income from a property or your profit,
whatever you decide to follow.
Some people follow gross profit,
some people follow their cash flow and have different ways.
Whatever it is in your life,
you wanna consistently go with it.
So I'm gonna go with income.
What's my profitable income that I get from it
after my cost of sale?
So, I don't know, maybe I'm gonna do an event
and my cash flow is gonna be a million pounds,
but it's gonna cost me half a million pounds
to do it, my cost of sale.
So I'm making half a million pounds worth
of profitable income.
And then I divide it by my capital deployed and my time.
So give yourself an hourly rate and your teams hourly rate
to make all that happen.
You divide the two, you times by 100
and that gets your return on investment.
You wanna be aiming as an entrepreneur for at least 20%
when it come on to real estate and property
and higher on business because business is much more risky
than property in my opinion so you wanna make sure
you aim for the highest possible return
on investment possible.
That gang, that gang, is my little walk through fast pounds
and slow pounds.
It is one of the quickest ways that you can
really grow the wealth in your business.
Comment below, what'd you think?
I love to get involved in the conversation
in the comments and if you're new here,
don't forget, make sure you subscribe,
click one of those little thumbs up
so we can help you grow your business
and get it out to the YouTube world.
See you real soon, bye bye.
Hope you enjoyed that video to help grow your business.
It gets better cause you can watch more of my videos
by clicking here and don't forget to subscribe
to the channel by clicking here.
And for the grand finale, why don't you come see me
at one of my events, one of my seminars
to help grow your business.
You can find out all the details in the video description
or go to jamessinclair.net.