People Are Too Polite About Wealth Building
It’s turned into a very conservative, suit-wearing industry.
If you Google the word “wealth” and then go and look at the news, I find it so riveting, almost like watching a car crash or a train wreck: it’s just perpetuating this idea that if you do anything outside the norm, you can expect to be harmed.
There’s an entire industry of wealth professionals who are educated in one tiny sector of wealth-building, whether it’s shares, managed funds or property. They believe that this gives them the right to speak holistically about wealth-building.
The best example I can give you of this is the financial planner who may be incredibly well versed on the topic of legislation around retirement funding and insurances and things like that, but who has a fairly theoretical or cursory understanding of property, or a cursory understanding of wealth building and money management – and yet speaks to their clients as if they are experts in all of those things.
I think there’s a massive incongruence between the number of people wearing hats claiming to be wealth gurus, but at the same time they themselves are not investing in their own product, or they are certainly not financially independent.
And the flip side of that is the number of people who have built their wealth from earning an income by telling people how to manage their wealth, rather than from having made good investment decisions themselves.
The Train to Financial Freedom is a Slow One
Society tells us that the train to financial freedom is a slow one.
If you think about it from a number of different levels, I can understand why this belief or paradigm has come about and why governments reinforce that belief.
As I said before, the perception is that if you deviate from what is known, what is regulated, that it must be dangerous.
If you believe that, then it will be true.
It’s kind of like a self-fulfilling prophecy.
There’s No Way to Get Rich Fast
I don’t actually believe in a silver bullet. I don’t believe that there’s a way to get rich fast.
You’ve got to do the hard yards, but I think there are a lot of self-made business owners, self-made entrepreneurs and CEOs who have hustled hard and worked hard to build their status as leaders in whatever it is that they’re good at.
And then they’re expected to put their money into these fairly mediocre performance investments, partly because they believe it will be safe and partly because they believe they have no other choice,
So, it’s pretty uninspiring for a lot of people, when they think about how to build wealth.
You Need to Think Like the Banks & Retirement Funds
So if I were to suggest a paradigm shift, it’s to start thinking about this concept of velocity of money. I’ve talked about this in past podcasts, where you’ve got to start thinking like the banks and the retirement funds.
They tell us, “Put your money with us and we’ll look after it, and we’ll pay you a pretty piss-poor rate of return on it.” And then they go and use that money and invest it over and over again to get maximum velocity so they can make as much money as they possibly can. They gouge with fees, they gouge with taking on risks, they subject that money to ups and downs of market turbulence.
And then, hopefully, at some point in the future, you have the money that you need to live comfortably in retirement. Although, as we know full well, that is certainly becoming less and less the case.
The governments support this because it’s in their interest to have us working as long as possible.
Some of you may have heard the discussions that have been circulating for some time now about the loss of brains trust in the workforce as, particularly, the baby boomers start to retire and the gaping hole that is leaving in the workforce.
There are all sorts of schemes at the moment to try and get people to stay in the workforce longer because they need those skills and they need that wisdom.
So from that perspective, I see why retirement is getting pushed further and further out into the future: it supports society and it keeps the wheels moving.
But here’s the thing that I want to frame up for you as a potential paradigm shift. I’m not arguing for people to retire and go and play golf all day, every day, or take up art classes, or become useless members of society.
What I’m arguing for is that people set out to achieve the financial freedom that they need, well before retirement age so that they can go out into the world and have the impact that they want.
Whether that means continuing to run your business, or whether it means having an impact in the world that might be different to the pathway that you’re currently on, where you can use your wealth to influence the people in your community, your children, other members of your family.
Think about the number of people you’ve met in your life who hate what they do, they just hate it, but they do it because they have to. They do it because it puts food on the table. They do it because the investment portfolio that they have isn’t enough to carry them through the baseline lifestyle cost that they have created.
Inkosi Wealth Client Case Study
Let’s talk about a client of mine, we’ll call him Frank. He has a great property portfolio. I can tell he’s worked really hard and that he’s been a great steward of his money.
He has suffered from massive delayed gratification. He talks about his financial needs being extremely modest and, in fact, the property portfolio he already has is throwing off more income than he actually needs to live.
But at the same time, he’s one of those guys that sees the responsibility of continuing to grow his financial base. He feels he has a responsibility: he has children that he wants to leave a financial legacy to.
He recognises that there’s an element of impact and he enjoys the idea of taking stewardship and investment to the next level.
So the process that we’re going through is, we’ve actually set a new passive income goal, we’ve set a new Inkosi goal.
We’re analysing what he already has at the moment, and it just looks like one big bucket of investments that spits out a bit of money. He hasn’t bothered to separate each asset into its own bucket so that he can analyse who the winners are and where the lame ducks are. He’s not making holistic decisions about how he manages his wealth and what he does with it.
So, once we’ve been through that exercise, we’re identifying what percentage of his capital he’s happy to put into the world of alternative investments, which we are going to give him anywhere from, say, 8% to 12%, conservatively, net income returns.
And what we’ve worked out is, even if we took the bottom of that (8%) and we said, let’s put a small fraction of your capital into those kinds of assets, let’s split that amount into many, many buckets, we’re going to increase his current passive income by 50% in the next three to four years and match what he has achieved by slogging it out over the last 30 years.
Now, right there, that is a mic drop.
We’re not asking him to take on a whole lot of risks. We’re certainly not asking him to liquidate any of what he’s got.
It’s about tweaking what he already has in play and optimising the cash flow from his overall portfolio.
This is what I call having your cake and eating it, too. Once you’ve done the hard yards to build a good capital base, this idea of transitioning to financial freedom is an easy one.
It’s really about just saying, “What is the minimum amount of capital that I need to take?” and then deviating from the traditional path and putting that into alternative, to anywhere from 2X to 5X my passive income stream.
For a lot of people, if they could do that right now, it would lead to game over.
Frank is a great example of what I see all day, every day, as being the entrepreneur who has the right mindset and has done all the right things, but is just not firing on all cylinders.
Get Access to Your Freedom Formula
So if I were going to give you some action steps to consider in terms of what to do about this, frankly, bullsh*t that we’ve been told about, wealth building should be number one.
Get access to your freedom formula. Go back to the podcast I recorded on this and get some clarity in terms of depth around what it means, and get clarity about what you want.
What would life-altering passive income be for you?
Create a Higher Level of Stewardship
Secondly, work out how to create a higher level of stewardship. Optimise what you already have.
How do you step up your stewardship? How do you move to the next level?
Instead of thinking about your assets as a big bucket, start to pull them apart. Who’s giving you advice on what’s working and what’s not?
Figuring Out How Much Capital You Need
And then the third thing is, start looking at how much capital you would need to have working for you if, say, you had a rate of 8-10% net income coming off it, to get where you want to go.
Challenge Your Board of Advisors
And then the final thing that I would say is, challenge the board of advisors that you currently have.
Why are they challenging you and pushing you down a certain pathway when it comes to your investing?
Is it that they have a vested interest? Is it that that’s all they know? Is it that they genuinely have your best interest at heart, but that’s the scope of their capacity to offer you products and investments?
Final Thoughts
I really, genuinely believe that this point in history is better than any other point in history to start flexing your mind to a different way of doing things.
I think this idea of retirement at 65 is redundant. I think that more and more people are frustrated with the system.
All these people I know who are self-made, who didn’t inherit a whole lot of money from their parents – they’ve made it themselves through sheer grit or talent.
If you earn a great income, it’s your responsibility to convert that into wealth – it’s the gift that this life has given you.
And if you want help with that, if you like this idea of understanding your freedom formula and how to massively bring forward your financial freedom or retirement, get in touch. Send me an email with some questions and I’ll certainly see if I can help.
If you’re a business owner feeling frustrated that despite doing everything right in the property investing playbook and you’re no closer to financial freedom, then head over to www.inkosiwealth.com to learn more about how you can use alternative investments to catapult your investing income and blend strategies to shave decades off your timeline to financial freedom.
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!
