Keith Weinhold hosts the Download Rich Education podcast to help you create passive income for huge results.
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If you invested $1,000 in JP Morgan in 1882, you’d be dead now.
Once you’ve had a bit of a laugh about that, realize that most people are forgotten in just three to four generations. If you don’t believe me, ask yourself: How well do you remember your great-grandfather? My memory of mine is hazy. Even if you remember your great-grandfather, do you remember enough to tell your child a story that they will remember and pass on? That’s unlikely.
Given this long-term perspective, your return on time is more important than a financial ROI invested – and what you give back to others. I call this a ‘Return On Life’. This return is generated by living well and having a positive impact on as many other people as possible. You need focused time to establish this strategy.
Whether you’re a diligent entrepreneur or an employee who wants to change something, options are more important than obligations. If you are already a successful business owner, you may want to bolster your legacy and ‘Return On Life’ with charitable contributions or establishing a foundation. Additional income streams can provide you with these options.
Some like to denigrate the importance of money. I’m not going to do that here. Money is an essential resource, perhaps one of the five most important resources in your life. It’s all about putting those funds to their best and highest use: money buys time.
Swapping time for money
I’m not a fan of investing in conventional retirement plans like 401(k)s and IRAs.
In my opinion they are asking you to put off your life (monetary energy) during your childhood and middle age so that hopefully you can recoup it in old age. In my experience, after adjusting for inflation, emotion, taxes, fees and volatility, the real returns of stocks and mutual funds are often zero.
Rather than a “tax deferral plan,” I believe a better name for conventional retirement plans is a “life deferral plan.” Many praise the financial benefits of trading today for tomorrow. But no one identifies the major “Return On Life” risks of these plans.
You can start wakeboarding at the age of 35. But are you physically enough to do it with your grandchild at age 75? Investing in retirement accounts is just a claim to an uncertain future in the hopes of buying back quality time later on.
Alternatively, one can invest today for passive income, as I have personally done and helped many others. For example, one can invest in real estate, buy income real estate with mortgages and hire a professional real estate manager. If this trail interests you, my first advice is to buy well. Buying property whose monthly rental income exceeds mortgage payments and operating expenses ensures that you are passively paid while you are still young enough to enjoy it. In combination with long-term real estate valuation, you grab today and tomorrow at the same time.
The best way to buy time is to invest in something that is expected to pay you back today, and not just a claim to a dim future. Real estate investors call this “positive cash flow.”
There are many sources of additional income streams, but in my experience residential real estate is particularly resilient. Not only is it more stable than most asset classes, it fulfills a basic human need. It’s non-discretionary. Everyone has to live somewhere; people will pay you to provide this. At its core, this is easy to understand.
The power of now
I recently had a friend invite me on a beautiful mountain adventure trek in Alaska. But I thought I was too busy – I had to do some chores and bring in money for my next investment. I almost told him I couldn’t go on an adventure, but luckily I caught myself in time. I made the financial investment later, and I didn’t put off the real investment opportunity: live today.
In The power of now, Eckhart Tolle writes, “Most people are never fully present in the now because they subconsciously believe that the next moment must be more important than this. But then you miss your whole life, that is never not now.”
There is undoubtedly something to be said for ‘delayed gratification’. Saving, for example, creates capital formation for investments. But there is a real risk with too much delayed gratification. To be denied gratification.
Living well and helping others is infinitely more important than the Fed’s rate decisions, house prices, rents, fluctuating mortgage rates, fear of a recession or the level of monetary inflation. We don’t even want money. We want money to give us space for things like peace, joy, self-expression, love, freedom and meaning. I admit – I almost forgot about this one day.
What meaningful things do you do with your time? Growing up, you looked to the future and told yourself that you would change the world. Have you let the world change you instead?
Wherever you are in your current career, whether you’re passionate about it or not, additional sources of income provide you with both a safety net and the leeway to turn.
The only thing you can control is the next decision you make. So ask yourself: What is your Return On Life?
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