E28 - Paul Moore / Owner @ Wellings Capital - Jeff Mendelson | Automation Superhero

E28 – Paul Moore / Owner @ Wellings Capital

Everyone likes a get rich quick scheme, but the reality is that the best methods for building wealth are about making the right decisions over time. Real estate mogul Paul Moore shares with us his One Big Tip when it comes to differentiating between the steps toward lasting success and the steps toward failure.

The Definition of True Wealth

The first step to understanding how to use your money wisely is understanding what it means to have true wealth. There’s a difference between having things that are flashy and things that are useful. “It may be shown off by a jet or a limousine or a mansion,” Paul explains, “but true wealth is having assets that produce income.”

Paul takes a lot of his inspiration from Warren Buffet, quite possibly the most successful investor and businessman alive. Paul rattles off one of Buffet’s well-known quotes, “If you don't learn to make money while you sleep, you'll work until you die.”

But how does one learn to make money without working? How can this passive income be generated? The answer is to put your money into something that pays you back. Many would call that investing, but Paul has a distinction to make.

Investing vs Speculating

After selling his company to a public firm in 1997, Paul found himself making poor decisions with his money as he searched for his next focus. “I started chasing shiny objects,” he admits, “buying and investing in all kinds of things I didn't know anything about.”

Initially, he considered himself a true investor. But what he didn’t realize was that he was really playing the part of a speculator. “I thought, ‘I'm an investor now,’ but I actually became a professional speculator.”

The difference between speculating and investing, Paul says, is your margin of safety. “Investing is putting money into something where your principle is generally safe and you've got a chance to make an income stream from it. Speculating is when your principal is not at all safe, and you've got a chance for appreciation and income.”

With a margin of safety, you can make wiser decisions about where you put your money. “There's a significant margin between the potential, the revenue potential, and where things would be if things go really south.”

Recession-proof investing is easier than it sounds, but few people are willing to take the steps necessary to build wealth that way. When Warren Buffet was asked by Facebook owner, Mark Zuckerberg, why others didn’t follow his example when it was so easy, Buffett replied, “Nobody wants to get rich that slowly.”

You can hear some of Paul’s best tips for building wealth with his ironically-named podcast “How to Lose Money”. You can also visit him on his website.