We can’t wait around for our government to make life better for us. Proactive wise action on our part, though, may yield fabulous returns.To succeed in life, we should wisely harness our time, talent and money. At an individual level I consider those three resources the powerhouses of capitalism.

Regardless of how young or not we may be today, we hopefully have sufficient “runway” left ahead of us to construct virtuous cycles that propel us forward further and faster than we might ever venture in their absence. Consider these three different cycles:

1. Time-talent-money

2. Money-talent-time

3. Talent-money-time

Make no mistake, capitalism is the most successful system ever created by Economic Man over thousands of years of recorded history. Capitalism’s proven ability to generate immense wealth for genuine capitalists – those among us who harness existing capital to grow wealthier tomorrow than we are today – outstrips socialism’s and even conventional communism’s capacity to build riches for people and countries. (China’s remarkable economic growth in recent decades is largely due to its unique blend of central planning, carried out by savvy engineers-turned-technocrats, coexisting with capitalist ventures that have exploded into globe-straddling behemoths like Huawei, Alibaba and Tencent.)

The fascinating reason capitalism has succeeded is hinted at in Eric D. Beinhocker’s book The Origin of Wealth. In his first chapter of that tome he writes: “… wealth creation is the product of a simple, but profoundly powerful, three-step formula – differentiate, select and amplify – the formula of evolution. The same process that has driven the growing order and complexity of the biosphere has driven the growing order and complexity of the “econosphere”.”

If you think about any successful business you know of, perhaps even your own if you’re a savvy entrepreneur, you’ll recognise that product and service differentiation, identification and selection of offerings to the marketplace, and focused amplification of what works, are how it has flourished.

As capitalism has spread worldwide, global wealth and humanity’s numbers have skyrocketed since the Industrial Revolution 1.0 began in the late 18th century!

But for all its powers, capitalism is a lousy distributor of the wealth it creates. Hence a competent, clean government is required to spread out some of that excess economic bounty for the benefit of all members of society through an equitable tax framework. (By the time you read this you’ll know more than I do now, as I write this, about the specifics of Finance Minister Lim Guan Eng’s 2020 national Budget. Therefore, you’ll be able to assess for yourself how competent a job Lim does balancing the needs of poorer Malaysians against the vital importance of introducing fresh incentives for business owners and operators to eke out profits in our tough environment of decelerating global GDP.)


Thankfully, quite apart from Malaysia’s budget specifics, each one of us can proactively select at least one of the three different virtuous cycles I listed above to incorporate into our personalised programmes of self-advancement.

Here’s what I mean by each cycle:

1. Time-talent-money

We can opt to use the time we have either badly or well. If we use it badly, we will squander much of this most precious resource, the very yardstick of our life on Earth. But if we use it well, we can invest at least some of our available time to develop our talents.

And should those talents possess some economic value — such as critical and creative thinking, writing, painting, acting, singing, dancing, selling, persuading, communicating, consulting, cooking or anything else at all that has value in the marketplace — we may then harness them to rake in more and more money.

2. Money-talent-time

Alternatively, we may choose to use some of our money on ongoing adult self-education so we enhance our store of knowledge and career-specific skills. Personally, I believe allocating between 1 per cent and 3 per cent of either our gross salary from conventional employment or that proportion of our business revenue on developing ourselves — via relevant books, trade journals, audio training, workshops and conferences — will yield a higher return on investment (ROI) than any other possible expense.

Then, as our talents blossom through knowledge enhancement and consistent practice, our capacity to work smarter instead of constantly harder will free up extra time that we may eventually use any way we wish.

3. Talent-money-time

Finally, if we possess talent that is clamoured for by the marketplace, then that recognition will be accompanied by higher pay rates or business profits. If we then use those excess funds to go on longer, nicer, more frequent holidays with our loved ones or even to perhaps one day fully retire earlier than anticipated, then we will be using our heightened talent-generated excess money to buy us time to live the latter portion of our lives on our own terms, far away from any rat race!

The crux of attaining a successfully funded retirement is to shunt more and more active income during our working decades into a diversified savings and investment portfolio that generates a burgeoning flow of passive income.

I recommend you focus on creating your personal river of passive income using dividends, rental, distributions and interest. Next week we’ll take an exploratory dive into the specifics and technicalities of creating such a diversified deluge of liberating passive income.

© 2019 Rajen Devadason

Rajen Devadason, CFP, is a Licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via [email protected] You may follow him on Twitter @RajenDevadason

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