The 3-Part Game to Wealth-Building
In this week’s episode, I unpack the overarching game plan and context that you need to keep in the back of your mind on your wealth-building journey.
In my opinion, everyone should consider alternative investment strategies – it’s just about getting the timing right. That’s why you need to know what part of the game you’re in.
– part one of the game: building capital (you can’t expect to build wealth from fresh air),
– part two of the game: changing the trajectory (utilising alternative investments), and
– part three of the game: structuring your assets to create annuities (income streams that will just last forever).
00:00 – Intro
03:29 – Don’t Expect to Build Wealth from Fresh Air
04:46 – Changing Your TrajectoryRead More
8:55 – Structuring Your Assets to Create Annuities
10:11 – Identifying What Part of the Game You’re In
13:12 – Final Thoughts
Over the last few weeks, I’ve received a ton of emails from a bunch of you who are clearly interested in the topic of alternative investments but want to have a better understanding of the context of wealth building and achieving financial freedom.
If you want to reach financial freedom well before retirement age, you need to have an overarching game plan and context in the back of your mind.
So, I want to unpack the three parts of the wealth-building game. If you understand the context of each part, it’ll guide you into making better investment decisions and how alternative investing could fit into your portfolio.Read More
Shaking Things Up
For many people, being in the workforce for 45 to 50 years just isn’t palatable. They have a desire to build wealth so that they don’t have to hustle in their businesses forever.
I am one of those people.
I like the idea of reclaiming my time and my resources and having the influence I want – it gives me the freedom to choose whether I work or not.
A lot of the information out there advocates for traditional investments like shares and funds. That is certainly one pathway, and it’s a good starting point for a lot of people.
But as you become more knowledgeable and start to grasp that building wealth is your ticket out of the hustle and to freedom, it’s important to start shaking things up regarding the way you play the wealth game.
Don’t Expect to Build Wealth from Fresh Air
The first part of the wealth game is understanding that you can’t expect to build wealth from fresh air – you have to build capital.
While building capital can mean different things, it essentially points to building a pool of resources, in this case money, that will allow you to then look at investing into things that might deliver the sort of cash flow that you want to maintain your lifestyle.
So, part one of the wealth-building game is about establishing how you can take the premium income you’re earning from your business and amplify it.
You could do that by being super active in your investments, or you could do it through the use of leverage. Alternatively, it could be by participating in deals with people who are more skilled than you – there are many ways to achieve your goals.
There’s no right or wrong.
Whichever way you do it, the first part of the game that you have to keep in the back of your mind is building a big enough capital base that will allow you to move to the next part of the game.
Changing Your Trajectory
Part two of the game is about steering away from the smooth investment line that will get you where you need to be in 20 to 25 years and instead of changing the trajectory of your investments.
For example, you could look at taking the capital you built through traditional investments and using it to introduce some alternative investments into your portfolio.
The Australian and the New Zealand real estate market has been instrumental in my investment journey. But the challenge that I feel people have is they continue playing the game in the traditional market their entire lives – and that’s usually because they don’t know what’s out there.
But suppose you learn and educate yourself about other opportunities early on in your investment journey. In that case, you can take a small bit of the cherry and completely change the trajectory of reaching your goals.
For example, suppose you’ve created a portfolio with a couple of million dollars, but the income stream from that is only somewhere between 1% to 2.5%. If that’s the case, you can’t really do much more with those investments than cover a fraction of your living expenses.
But suppose you took a small percentage of that and applied it to investments that deliver strong, predictable cash flow. In that case, you could move into another game where you’re changing the trajectory of your timeline to hitting your goals.
Sure, you could reach your goal in 20 to 25 years, and you may have enough income to cover your lifestyle for that period. But maybe you could drop that timeline to five years instead of 25 years – all you have to do is change the trajectory.
Everyone’s freedom formula is different, though. So you need to play with the numbers and understand what percentage of your capital you need and what minimum viable number you can put into the alternative stream to shorten your timeline.
For example, if you’re right at the beginning of your wealth-building game and you’re wringing a deposit together, then adding money to alternative investments might not be the best game plan for you at that point. Maybe your focus needs to be on leveraging your investments to do something meaningful with the capital that you have.
But for those people who feel like they’ve got a reasonable capital base that might be anywhere from half a million dollars to a couple of million dollars, then maybe now’s the time to start looking at part two of the game and figuring out how you can change your trajectory.
Structuring Your Assets to Create Annuities
The final part of the game is where your investment income is at least equivalent to your living expenses – that is my definition of life-altering wealth.
If you have the freedom to choose how you spend your time and how you influence what you want in the world, then you’ve created life-changing wealth.
So, part three of the game shifts your focus from generating that wealth to finessing your existing wealth. You don’t need to make big changes – you simply have to take what you have and structure it to create annuities (i.e. income streams that just last forever).
If you can get the chemistry of this right, then you will put yourself in a position where your money is working harder than you are. You’ll have the capacity to not only continue growing that for the remainder of your life but also to leave behind income streams for the next hundred years.
Identifying What Part of the Game You’re In
So, if you’re trying to work out your next step, the first thing you have to do is ask yourself which part of the game you are in. Is it part one? Part two? Or part three?
If you can at least identify what part of the game you’re in, that will put you streets ahead.
Unfortunately, too many people end up just settling on doing more of what they’ve already done – it’ll get you to where you want to go, but it’s going to take you a long time. So, if you want to achieve financial freedom quickly, you have to tune into these three parts of the game.
While I want to help you understand what part of the game you’re in, it’s important to remember that no game plan is the same for everyone.
If you’re a younger investor or someone who has left their wealth creation journey to a later point in life, then adding alternative investments from the get-go might not be the right strategy for you. You’ll need to focus on building capital first.
On the other hand, if you’re running a successful business and you want to bypass traditional investments, then let’s jump in and see what we can do in terms of building you a plan for your circumstances.
In my opinion, everyone should consider alternative investment strategies. It’s just about getting the timing right. And that’s why knowing what part of the game you’re in is super important.
Once you’ve got that, you can start to articulate whether or not the strategies and investments you hold fit the game you’re playing.
I generally don’t work one on one with people who are trying to build capital. Having said that, I can certainly give you some resources and provide assistance where I can. But, the place that I want to play in (my genius zone) is helping business owners, who have a bit of capital behind them, accelerate their wealth creation.
So, If you’re interested in understanding how to create wealth through alternative strategies, please check out my programs, where I help you catapult your investment income and blend strategies to shave decades off your timeline to financial freedom.
Or, you’re welcome to get in touch today, book a call with me, and I would be happy to talk you through it – no obligation!
Ready to Get Started?
Apply for your 1-on-1 Mentoring Program Now
In this episode, we discuss the top...
In this episode, we discuss the...
In this episode Kan and I explore...
Welcome to the 169th episode of the...