It works by building wealth exponentially through strategic re-investment of profits, striving to increase return on equity on an ever-growing net asset base. Through a mix of tax arbitrage (similar to salary sacrifice superannuation), compounding effect and the ability to assess opportunity cost, a Wealth Engine approach is mathematically compelling compared to other investment approaches. Wealth Engine framework allows you to home in and find your ‘sweet spot’ using the 4 levers :
- Return of Equity %
- Re-investment ratio %
- Gearing ratio %
- Net Profit %
It involves solving complex (but not impossible) problems with 4 unknown variables (called a Quadrinomial algebraic expression).