THE OLD INVESTOR MINDSET? IT IS TIME FOR THE MINDSHIFT.
Do you know the old adage give a man a fish? In this case, give this man $2,000,000, and he lasts 25 years after retiring at age 65, then he will have $80,000 a year to divide amongst him, his spouse, his children, and grandchildren. Actually, it will be more like $58,000 after taxes, so enjoy the balance of your life eating frozen dinners, with an occasional big night out to Olive Garden.
Life is short. No, seriously, life is short. Do you feel it speeding up? Do you see it pass you by, as another car in the gridlock traffic that you are sitting in every morning, brainlessly listening to something on the radio that you are actually not even listening to?
Not that long ago, I had the old mindset of putting enough into a retirement account for me to live off for the rest of my life, and hopefully leaving a nice chunk for my family to at least have a healthy start to investing on their own. The formula is this: You work until you are 65, and you save and contribute to your 401k, you have your nest egg, and when you combined that with your $1900 social security check, you hope it lasts until you die - A finite piggy bank. You no longer have to work, but you have to, stressfully, watch your pennies the rest of your life, and never splurge, because you need to pass along something to your loved ones. I often hear the number $3 million as the number you need to retire with. $3 million sounds like a lot to a lot of people. I guarantee you, the vast majority of people are going have nowhere near $3 million in their 401k by the time they retire. If you follow this old mindset, take a look at your 401k, and do the math. How much will be left there? You, like most, are thinking: Time is running out! "I can never retire!" I keep hearing people say that, so is that it? Are we F 'd? I am here to tell you no, you are not F'd. You can retire, but your money? It has to keep working its ass off for you. Sorry money; it's a tough life. But somebody has to work. The secret sauce is you quit working, but you never stop, financially educating yourself and therefore making wise investment decisions.
Do you know the old adage give a man a fish? In this case, give this man $2,000,000, and he lasts 25 years after retiring at age 65, then he will have $80,000 a year to divide amongst him, his spouse, his children, and grandchildren. Actually, it will be more like $58,000 after taxes, so enjoy the balance of your life eating frozen dinners, with an occasional big night out to Olive Garden. Alternatively, TEACH a man to fish - to create never-ending streams of income – and that money will never run out, and he or she will be able also to pass that wealth-building knowledge onto his or her spouse, children, and grandchildren. Now you can eat out at Olive Garden every night – true abundance.
Honestly, why think small? Why have that feeling that I slaved my whole life for this nest egg, and now I need to guard it, protect it, or my family and I are going to end up on a park bench? Someone shared with me the other day that they are earning 6% annually on their investments… nope. Subtract 3% annual inflation, and they are making 3%. Not only should this not get you excited, but it should also tip you off that you won't precisely be creating generational wealth. If that person has $1,000,000 actively invested, he is making a whopping $30,000 a year. Sorry, no Olive Garden.
So, where, who, do I put my money with? How do I learn the ropes? Always keep working on that financial education. I make it no secret I like to invest my money into apartments. I love how you earn cash flow - hopefully, 8 – 10%. By the way, the depreciation you write off will more than offset those earnings, so you don't have to worry about that inflation with the old mindset method. If you are earning an overall annual return of say 16 -20% ( which includes the capital appreciation), you can put that remain 8 - 10% away for a rainy day. It is literally having your cake – the average annual return or IRR, and eating it to – the cash flow. This is the new mindset – a mind shift. This is abundance. You no longer have to count your pennies. You can now go to Olive Garden. Hell – make it Applebee's.