WSO Axioms

WORK SAVE OWN AXIOMS

ax·i·om 'ak-sE-&m noun: an established rule or principle

SAVING

Saving is the “quantum leap” activity that propels you out of a subsistence financial life.

You must overcome Parkinson’s Law (expenses rise to equal income) by learning to save

BORROWING

When you borrow, make the term as long as possible, but plan to repay the loan as soon as possible.

Borrow to multiply assets, not to gratify consumption desires.

Structure your saving so that you can “borrow” from yourself, and pay yourself the interest that would have been paid to lending institutions.

FINANCIAL LITERACY

Understand the difference between assets and liabilities. Acquire assets.

Besides analyzing the benefits, you must understand the full cost of your financial decisions, including the opportunity costs.

The most effective financial planning results come from controlling or eliminating Expenses (transactions that deliver no control or financial benefit) rather than chasing a higher rate of return.

Control is an intangible but invaluable aspect of every financial transaction.

You should have two businesses – the one where you earn money, and the bank where you keep it.

WEALTH

Work and Assets are inextricably linked in the formula for wealth. First you work to acquire assets, then you work with your assets.

The greatest returns are achieved when an individual concentrates his/her work, savings and control in one enterprise.

It is not necessary to invest in the stock market in order to become wealthy.

Concentrate assets for greatest growth, diversify for preservation.

INSURANCE

Whenever possible, look for ways to self-insure some of your financial risk, especially if your financial program is large enough to function “multi-generationally.”

Life insurance is different that all other forms of insurance. With life insurance, the question is “when,” not “if.”

Term life insurance may be an affordable way to meet a current need, but the long-term financial ramifications are very expensive.

For banking purposes, the objective should be to get as much money as possible into a policy with the least amount of insurance instead of trying to put as little money in and provide the greatest amount of insurance (initially).

(Nelson Nash)

REAL ESTATE

Unless your personal residence generates an income (via rent, property leases, etc.) your home is not an investment. Most home ownership is really a form of subsidized renting.

In considering real estate for investment purposes, one key issue is whether or not this property has reached its “end use.” Another is who has control (through zoning, covenant, contract, etc.) over changing the use of the property.