A 29-year-old self-made millionaire who earns $100,000 a month in passive income says there are 4 rules he created to get rich
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- Building wealth today takes a different set of rules, according to self-made millionaire Nathan Latka in his book, "How to Be a Capitalist Without Any Capital."
- To get rich, one should spread their energy across several projects and create a system that consistently produces their desired outcomes, he said.
- They should copy their competitors and capitalize on hot markets, according to Latka.
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Building wealth doesn't take what it used to.
That's according to self-made millionaire Nathan Latka in his book, "How to Be a Capitalist Without Any Capital." With $119 in his bank account, Latka founded a software company that was valued at $10.5 million just five years later. Today, he earns more than $100,000 in passive income every month.
In his book, Latka writes that new wealth doesn't "play by the old rules of business that the masses follow." Instead, they follow these four rules.
1. Don't focus on just one job or venture.
The standard advice to become an expert in one field - such as a job or venture - gives one a single point of failure, Latka said.
"When engineers design a bridge, they never want to have a single point of failure," he wrote. "If the wind picks up to 200 miles per hour and a cable fails, the bridge still has seven other cables to back it up. Likewise, you'd never want to build your wealth around one endeavor. If that one thing fails, you're destroyed, and you have to start again from scratch."
Latka advises multi-tasking, guided by his "Three-Focus Rule" - focusing 80% of your time on one project (the one with the most earning potential) and splitting the remaining 20% of your time on two other projects.
Having a side hustle not only helps you grow and make new connections, it also helps diversify your income - a key component in planning for the future, Andrew Westlin, a certified financial planner (CFP) and a financial planning professional at Betterment, previously told Business Insider.
2. Copy your competitors.
Coming up with a remarkable new idea isn't the right way to approach building wealth, according to Latka.
"The way to get filthy rich is by aggressively copying others and then adding your own twist," he wrote.
He took to the tech industry for an example - Facebook copied Snapchat's example by releasing Facebook Stories and Instagram Stories after Snapchat rolled out Snapchat Stories. Facebook also released disappearing messages to its messaging app after Snapchat did it first, Latka wrote.
Copying competitors isn't revolutionary, he wrote: "The key is to analyze a business and pinpoint a need it's not meeting for its customers - and then meet that need yourself. You're going to build yourself rich by copying one, making it better, and creating momentum."
3. Quit setting goals.
Goals are keeping you broke, according to Latka, who likens a goal to wanting a golden egg. If you build your life around it, you'll feel there's nothing left to strive for once it's achieved, and you'll become bored, he said.
Achieving a goal also evokes a fleeting sense of joy, which fades as a new goal comes into focus, psychologist Adam Alter previously told Business Insider. Setting goals can also cause you to push yourself too hard, he added.
He said that the nature of goals leaves goal-setters in a failure state most of the time, in which they have not achieved what they want. That, in turn, can turn them off from the goal.
"You'll have to remotivate yourself to come up with another golden egg to chase," Latka wrote. "It's much better to invest your energy into creating, feeding, and nursing a system that pumps out golden eggs every day. That way ... you'll have a golden goose that keeps making golden eggs for you."
4. Sell pickaxes to gold miners.
According to Latka, you should capitalize on the hard work of others. He compares it to the gold rush - miners faced grueling conditions as they went westward. After arriving, they realized they needed pickaxes for more efficient mining, he said. So others traveled over and sold miners those pickaxes, thus getting rich with half the effort.
Essentially, you should profit from a hot market that others put the effort into building, he said.
He advises paying attention to what's booming. "If weekly food delivery is big, don't try to compete with HelloFresh and Blue Apron," he said. "Rather, figure out the infrastructure that those businesses rely on and offer it to them."