Traditional financial/investment planning is essentially about retirement planning and not financial independence planning.
What is your personal financial goal? To have enough to “maybe” get you by in retirement or do you want to live the life you want to live now – one where you’re not tied to a time clock or to a set schedule? One where you can go where you want, when you want and with whom you want? Most people would say the latter, but yet they stick to traditional investment professionals/financial planners who are steering them in the wrong direction.
Think about traditional financial planners. They try to tailor an investment strategy built around categories and what compartment you might fit into it. They have algorithms for selecting certain stocks, mutual funds or bonds built around demographic data such as age, income, number of children, and retirement age. If you’re young and single, your portfolio may have more high risk, high return assets. If you’re older, your portfolio might contain more low risk, low return assets such as bonds built to preserve the value of your portfolio for retirement.
The truth is, traditional financial planning isn’t cutting it for most individuals.
Most are falling short of the funds needed for a comfortable retirement. That’s because they’re relying on machines and professionals built to make them feel good about their “path to retirement,” but that could be false hope. What happens when a 2008 Financial Crisis or COVID type event strikes just as you’re preparing to retire? Half the funds that these algorithms and planners had conditioned you to believe would be enough for your retirement is suddenly gone. What do you do then? It’s like you’re set back 20 years but without another 20 years to work to recover the losses.
Avoid getting boxed into categories and being compartmentalized by algorithms and financial planners that devise investment strategies for broad groups and not for individuals. Instead of being confined to an investment plan made for a certain group or demographic, go with an investment plan tailored specifically for you.
Instead of planning for retirement, why not plan for financial independence?
The best way to customize an investment plan for wealth/financial independence is for you to call the shots instead of letting planners and algorithms call them. Take control and create an investment plan for yourself.
You see there are many great investment options out there that are preferred by ultra-high-net-worth investors (UHNWIs) that many high-income and high-net worth individuals can model in order to achieve their goals of financial freedom; but, not surprisingly, these investment options are not offered by the Wall Street financial planner.
Maybe you’re thinking that modeling your investment strategy after one group (the UHNWIs) is just another way of compartmentalizing yourself into another group that you’re trying to avoid by getting away from Wall Street, but there’s a difference. Modeling the ultra-wealthy doesn’t mean doing exactly what someone else is doing but only mimicking their investment goals and objectives that made them wealthy. You can do this without losing your individuality and your own goals, interests and objectives.
So what are some strategies and objectives that UHNWIs focus on when devising an investment plan for wealth?
Multiple Passive Streams of Income.
The wealthy understand that in order to break away from their jobs, they have to find ways to make money outside of their jobs. With only a number of hours in a day, they had to figure out how to put their money to work to generate income in their sleep. The two go-to assets for generating passive income are cash-flowing assets like productive businesses or commercial real estate. And by teaming up with experienced professionals by making passive investments in a private company or fund, they’re able to create multiple streams of passive income that can be reinvested to compound wealth and accelerate the timeline for financial freedom.
Don’t Be a Slave to Wall Street.
The wealthy focus on private assets non-correlated to Wall Street – assets insulated from wild market volatility that can tank traditional portfolios.
Hedge Against Inflation.
Focus on assets that generate income that keeps pace with or surpasses inflation. Certain goods and services will always be in demand. Invest in demand and you’ll be insulated from the damaging effects of inflation.
Leverage Tax Benefits.
Passive investments in tangible goods or services structured as partnerships offer multiple tax benefits traditional assets can’t offer that allow you to keep more of what you make.
Be Uncomfortable.
To achieve financial independence and to not be merely content with retirement, the wealthy understand that you have to get out of your comfort zone. Break away from Wall Street and consider alternative investments. They understand that in order to reap the biggest rewards, they will have to take risks.
Acquire Assets That Grow Assets.
Buy a fish and you eat it for one meal. Learn to fish and you eat for life. While the middle class are focused on consuming, the wealthy are focused on producing – learning to create wealth and not diminish it. So, to create wealth, they’ll sacrifice it in order to accumulate capital to buy that fishing pole or any other asset that will pay them back and not just drain their pocketbooks. The more the wealthy can save, the more they have to invest. The more they invest, the more income streams they can produce and the quicker they can break away from their jobs and achieve their goals.
Understanding the Difference Between Good Debt and Bad Debt.
The middle class accumulates bad debt to acquire toys and stuff that deteriorates and costs money for upkeep. The rich leverage debt to acquire real estate or start businesses for investment.
To become wealthy, you will have to rely on yourself to achieve that goal. You have to devise a plan for yourself. Financial planners don’t have the time to focus on you. That’s why they throw your info into an algorithm that spits out a plan not tailored for you but for everyone like you or your situation. This group approach won’t help you get to your goals of financial independence. It might barely get you across the finish line of retirement, but that’s a big maybe.
If you want to start devising an investment plan for one, study the habits of the wealthy and mimic their tendencies and priorities to reach their level. Stop planning for retirement and start planning for freedom.
Take control of your investments and invest in one – yourself.
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.
