Obviously, that?s a silly question. Who wouldn?t want a high income, besides Mother Teresa? Everyone wants a high income. The question becomes ?Is a high income all you need for financial independence?? That answer is a trickier. Consider the following. A highly skilled physician might make upwards of $300,000 per year but he?s still getting paid for piece work. His salary is squarely dependent upon how many patients he can shuttle through his office or surgery room. How much does he make when he?s sick and can?t come to work? Zero.
What if he gets sick and dies? Income for his family stops immediately.
An alternate scenario involves a person who owns a single hotel that brings in $300,000 per year. This lucky individual hires a management company to do all the work associated with the hotel. He sits back and cashes checks. It won?t affect cash flow if he keels over dead from a bad Waldorf Salad. He could go to the Bahamas for a six month tropical round of binge drinking and the $300,000 is still coming in.
So is a high income the secret to financial success? Not in and of itself. The best of both worlds would be to have a high income and smartly invest it in income generating properties like the afore-mentioned hotel or a handful of residential income properties.
The Young Wealth Team