The UK millionaires paradise of Sandbanks is feeling the effects of the recession and some people are even going bankrupt. I look at this situation and ask myself what I can learn from it, to ensure such a financial calamity never happens to me.
It looks like most of the wealth was on paper only. A "phantom fortune" all built on money borrowed from the bank. This strengthens my resolve to always save up large amounts of cash and use that to finance my business and financial ventures. It might take a little longer, but the safety benefits are indisputable. Always keep lots of cash in the bank for investments and emergencies.
Being in debt is not being rich. I have heard so many people say that they have a million pound property portfolio, and even though the houses may be worth that much, their own personal equity was worth just a few thousand pounds. The banks really owned the properties. Sometimes, people who say this are actually in negative equity!
The story of Sandbanks shows that great wealth can be created and lost in an instant, if you do not play by sound financial rules.
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