When most people think about investing they think that it is a game of lottery tickets. People want the stocks to do the hard work for them. I was one of those people.
The patience game
This principal was drilled in on a Vlad TV talk where he talked about the money he made holding Apple, Google or some other blue chip. He made the point that he bought the company and made 25% or something. Meanwhile his friends that were gambling in the market hoping for a quick pay day either lost all their money or most. His point was that investing is about patience, it is a patience game. A wise person said that the stock market is a tool for transferring money from the impatient to the patient.
A blue chip is similar to an index fund because it is high quality and low risk. The money comes in the wait not in the rush. Meanwhile while you are waiting you are hustling up more cash to deploy into this secure but lucrative vehicle.
Free up your time
The principal was also drilled in on a recent podcast I listened to where the two hosts who achieved financial Independence (when the income from your assets funds your lifestyle) mentioned that they only invest in index funds. This made me do some thinking and then a light bulb went off.
Financial independence is as much about lifestyle as it is about return on investment. This is why when people hit me up about the investment club and ask what our return is I just find an excuse to turn them down. Wealth and financial independence come when you create a lifestyle that allows you to throw big chunks of money into your investment accounts, savings accounts and your liabilities.
When you invest in index funds you turn over the though that goes into picking investments and instead use that mental energy on budgeting, savings, cutting and increasing your actual working income.
Even if you win big on small you win small
If you invest small and you win big you still win small. 100% on a $1,000 investment equals $1,000, that’s not even enough to buy that Gucci bag you want so bad. The thing is that if you wanted to make $1000 you could go work for two weeks instead of waiting five years for that Google to become a ten bagger. Sometimes your working income is greater than your investing income, until it isn’t.
There are no short cuts
The key here is that investing isn’t going to let you skip work. Investing won’t let you skip the sacrifice. You gotta be triple double if you want to get to financial independence. So I get why they promote index funds. It lets you invest without the extra time effort and energy. Financial freedom is just as much about being debt free (your house) is it is about accumulating a huge nest egg. This freedom energy helps you bring in the income that will let you pay off debt and invest even more money.
So if you think that stocks, real estate or business are going to be a short cut to wealth, think again. There are no short cuts, there are no free lunches, there is no easy path. Do the work.
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Be great and invest well!