My least favorite investment club inquiry emails are the ones that lead off with ROI inquiries. These people are looking to see what they can get (the results) as opposed to what they can preserve and what they can become. Wealth is in part about the return but its also about the preservation of capital. It is about storage of capital, retaining capital and living out of the gains not the principal. In order to have significant gains you have to have significant capital, you get that through the process, not the ROI.
Why people seek returns
Most people are seeking returns because they want to buy what comes with high returns. They are still in the paycheck mentality. They want big money, fast, so they can spend it on flash. Not only is the counter the the goal of Todd Capital, it is counter to wealth accumulation principles period.
When you chase returns you get burned. When you chase the process wealth is inevitable. Don’t believe me? Ask the people who lost half their money in bitcoin if they are willing to show their faces. Even if you were a bitcoin person if you trusted the process you could have still won by buying the dip. But again, process over quick results. The markets aren’t a lottery machine and they aren’t just handing over millions to novices. You have to commit to a long term strategy.
What does wealth mean to me
On the Millionaire Podcast I always ask people what wealth means to them. Here is my chance to tell you what wealth means to me. To me, I see wealth as security and protection not as a means to rock Gucci and Louis. To me, wealth is freedom from needing a job, freedom from mortgage and freedom from a car note. I want to live life on my terms and I do that through my knowledge of finance. I don’t want to be at risk of getting fired and losing everything I have built.
This means that if you make a million dollars, you immediately pay off the home to remove that obligation for life, you pay off the car, and you create passive income to take are of your bills. You don’t go buy a Bentley. You situate yourself for financial freedom.
Fall in love with the process
In order to become successful you have to fall in love with the process. You have to to love the dirt not the clouds. You have to enjoy saving and deferring gratification over spending and showing it off. You can’t have your head in the clouds dreaming of the good life because even if you make it, so many people lose it.
What would Jews do?
This post is really about conditioning people to value security over stuff. This is why the Jews win. Jews value wealth as a means to solving their problems. They would rather have millions in the bank and no worries, than millions on their feet and nothing but problems.
In the black community we tend to flip this and the goal of this blog is to shift that thinking. We can’t continue to protest in $200 sneakers. We can’t complain about poverty from our smart phones while sitting in front of 60” TVs. We have to be willing to forego what looks and feels good to get our finances right.
So we have to learn to value sitting money aside, while it is boring and less fun. It is better to have that money sitting aside and solve a $300 emergency that comes up than to have sneakers on our feet and get sidelines by a random unexpected bill or expense.
I wan’t us to value wealth accumulation as a long term process. Get our head in the sand and wait it out. Wait wait wait and in five years you will have an abundance of wealth, OR you can spend all your money now and in five years you will be worse off than where you are today.
Don’t do that. Right now is the era of working and stacking. Make it and stack it then make some more and stack even more. Never spend, never sell and accumulate. That is how you gain power. You gain power through ownership and control not through borrowing and gaining access.
Don’t spend your windfalls
Last thing, in this new economy there is going to be a ton of money made. DONT spend that money on the good life. Spend that money on cash flow and appreciating assets. Preserve the wealth while you have it. If you are getting a tax refund, buy a house, if you are getting multiple refunds with friends, buy a business, buy some land, buy some stock, but something that will retain its value AND that will pay you monthly. Its time to build wealth not junk piles.
Be great this tax season and in this booming economy,