The secret to getting wealthy in the modern world is that you can’t rely on conventional norms, and you can’t save your way to financial security.
The key to getting wealthy is learning how to invest – invest the right way – because the reality is what everyone else is doing is not going to cut it. The first step is to recognize that what Wall Street is peddling isn’t going to cut it.
There are two investing camps on Wall Street:
- The Active Camp.
- The Passive Camp.
The active investors are the day traders. They’re the ones that think they can beat the market. They play the timing game – trying to time their buy and sell orders before the rest of the market wises up to take advantage of price spreads.
Timing doesn’t work. For the past 20 years, the average retail investor has failed to generate returns that keep pace with inflation. In other words, the average retail investor loses money playing the timing game.
The other camp – the passive camp – puts their money in hands-free investments like 401(k)s, money market funds, treasuries, CDs, savings accounts, and the like. Have you ever met anybody that got wealthy from any of these offerings? That’s because the returns from these offerings also fail to keep pace with inflation.
Wall Street is not the answer to wealth. It has never been. It might help you limp to retirement, but it won’t do much else. Smart, wealthy investors, do something different, and it all started with educating themselves.
What are the major steps towards educating yourself on investing the right way?
First, identify your WHY.
What is your “why” for investing? What is your ultimate goal? Do you want to free yourself from the confines of your day job? Do you want more time with your family? Do you want to be able to dedicate time to worthy causes?
Second, explore the HOW.
Asking yourself the questions above when trying to identify your “why” will inevitably lead you to the realization that to accomplish the objectives you set out for yourself, you’re going to have to create additional income streams for yourself. You’ve already established that Wall Street isn’t going to cut it. Wall Street products will not make it possible for you to retire early – especially since the returns will do no better than inflation. All this leads us to the next question, the “how.”
Educating yourself on how others, before you have achieved wealth, will go a long way towards answering the question of “how” – how you’re going to create the additional income streams that will allow you to quit your job and to dictate your agenda.
How do you create additional streams of income?
The answer will inevitably lead you to passive income investments – and not of the Wall Street variety. Only alternative passive income investments that generate above-market returns that outpace inflation and are insulated from downturns will make you the type of consistent money in your sleep that will allow you to quit your job. The more passive income streams, the better. Income that can be reinvested will compound your returns and accelerate your timeline for investing.
Third, discover the WHAT.
Now that you’ve explored the “how” of achieving the path to financial independence, the next question is “what”. You know that the “how” will require passive income streams. Now comes the “what”. What kinds of assets will help you generate the type of passive income streams that will help you achieve your goals?
To get where you want to go, educate yourself on how others have gone before you have done it. What types of assets have smart investors allocated to their portfolios to achieve the kind of wealth you covet.
You will eventually discover that the wealthy allocate their portfolios differently than the average investor in your education. While the average investor is almost entirely allocated to stocks and bonds, the ultra-wealthy allocate a majority of their investments to two major assets:
- Private Equity (investments in private companies).
- Commercial Real Estate.
Why private equity and commercial real estate? Because these assets possess the essential elements for wealth building.
These elements are:
- Cash Flow.
- Tax Benefits.
- Uncorrelated to Wall Street.
Fourth, identify WHERE.
Where do you find opportunities to invest in private equity and passive commercial real estate? The answer isn’t Wall Street. The answer is the private markets. There is no central private market. It’s a catch-all for everything not on the public markets.
Educate yourself on how to find these private opportunities. Some are available online; some are available through word of mouth. Educate yourself on how to network yourself on social media and your local market to come across these deals.
Fifth, find the right WHO.
Passive investments will require you to rely on and leverage the labor of others to manage your investments. While leveraging the labor of others will allow you to take a hands-off approach, time is only part of the equation.
To be successful, you will need to seek out experts who have the requisite knowledge and experience and have the infrastructure, the personnel, and the processes to execute their investment objectives. You will need to educate yourself on how to evaluate deals to speak the language of the promoters seeking your investment capital.
Financial Education Is The KEY to Wealth…
To become wealthy, learn from the wealthy. First, establish your WHY, then step-by-step discover the HOW, WHAT, WHERE, and WHO of how to achieve your WHY.
Kyle Jones is a co-founder and Key Principal of TruePoint Capital, LLC. Kyle is responsible for the company’s strategic planning, investment decisions, asset management, and overseeing all aspects of the company’s financial activities, operations, and investor relations.
Kyle obtained a Bachelor of Science degree from Texas State University – San Marcos, where he also played Division 1 Baseball.