I am tired of hearing how investing is risky and how a house & a 401k are someone’s largest investments. Why is it hard for people to realize that these can be the worst investments you can make? Personally, a 40-year mortgage with an adjustable rate based on a bad credit report is extremely risky but droves of people signed up. And I’d imagine the same people who may now be in foreclosure still believe starting a business; self-managing a stock portfolio and holding real estate are risky strategies.
You want to know the ugly truth? Your home is not an asset. If you don’t believe me, answer this: Does it cost you money to own your home? Unless you operate a bed and breakfast or some other money making venture through the use of your home, your house is a liability. And your 401k? I understand it’s nice to know that in a few decades you will be a millionaire, but what about today? (Or what if the market tanks as you approach retirement?) If you and your spouse sacrificed your holiday vacation, continued driving that clunker another year or even canceled your XM subscription, forget the “don’t worry, we will one day be millionaires mentality!” Life is meant to be enjoyed day in and day out. (And with religious views aside) We have one life on earth, let’s live it to the fullest everyday. The simple cure? Don’t drop most of your income into a mortgage while hoarding the rest away like a pack rat into an untouchable fund.
Hey! Life isn’t all about money!
I completely agree there is more to life! However, if you are saying this, ask yourself:
Do I truly love working 40+ hours a week just to pay the mortgage, plan for retirement and occasionally splurge on soon-to-be closet clutter?
If you absolutely love your job and answered yes, stop reading. You are one of the lucky ones. Conversely, if you dream of working less, while making (or donating) more money, it is absolutely vital to continue reading.
So how to start improving your asset holdings?
Forget the reality shows and turn off the TV. Or at least tune it to CNBC, Bloomberg or Fox Business (congrats! Your TV may have just become a business tax write-off). Start reading books on investing, real estate, negotiation, business, marketing and sales strategies. ($15 for a book is truly a solid investment; but only if you read it!) Also, search online for articles and blogs by the leading business and investment minds. By spending as little as an hour a day on continual learning, you will start to understand more about investing and how it isn’t about eliminating risk but rather calculating risk.
It is possible for anyone to start a financially independent life with a little outside help. Speak with bankers, lawyers and accountants. Work on tax strategies, fund allocations and other aspects of your plans. With their guidance and support, your business/investing foundation will be set, ready for an empire!
A Road Map for Success
1. Start a part-time business. Spend a portion of your weekend researching your strengths. Explore what your passions are in life. You may envision making millions of dollars to travel the world. Or to eliminate your material goods and help the less fortunate. (In any event, your dream will be much easier to achieve without personal debt and useless expenses.)
To start preparing yourself for business, read books like Rich Dad, Poor Dad and The E-Myth. Once you find your business idea, print some business cards and create a website, then get out there and network. It’s much easier and extremely cheaper to start a successful business these days.
Be sure to re-invest most of your profits back into yourself and the business. Ensure most of your personal expenses (cell phone, for instance) can be covered with pre-tax dollars.
2. With a profitable business, true investing will become much easier with the additional dollars coming in. Take baby steps at first. Read books on investing strategies – a few that come to mind are The Intelligent Investor, Investing in Real Estate and The Millionaire Real Estate Investor. Keep in mind, investing can be extremely rewarding but it also can be extremely risky if not handled correctly.
3. If you are worried about starting out investing, leave it up to the professionals. Real estate brokers and investment fund managers can be great advisors for your initial investment ventures. Take into account your investing profits will be much lower with the commissions and fees involved with outside investment purchasing and management.
Anyone Can Do It
Beginning with baby steps and learning as you go, your income streams from the various businesses and investments will continuously grow. More importantly, by starting a business then investing in real estate and other businesses, you will completely change your life. You will love to wake up in the morning and hate to go to bed at night. Your mortgage will quickly become just another expense and not a black hole eating most of your income. Your 401k can continue to grow but you will no longer be dependent on it as you reach retirement age. It’s an unbelievable life when properly allocating your assets and becoming financially free.
As the folks at Nike would say, Just Do It!
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Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor
Thanks Allen!