Financial Intelligence – There is no secret to becoming wealthy and there is no magic to it either. However, there is a trillion-dollar industry focused on convincing us otherwise. The financial industry wants your money to invest so that they can charge fees for below average results. Below describes the impact of fees on a simple investment:
Imagine that you are 21 years old and decide to begin investing for your future (Congratulations!). You invest $10,000. Your friend makes the same decision and invests $10,000. You and your friend enjoy a 6% return on this $10K investment for the next 25 years (all or any dividends reinvested). Your friend ends up with $16,000 but you end up with $33,000. What is the difference? The difference is that your friend paid 2% in fees each year and you paid no fees. Investing with just a 2% yearly fee wipes out 40% of your investment value over 25 years. I had no idea about fees when I started out but now know how insidious they are in destroying future wealth. Fees are termites to your portfolio.
Many years ago, I read a book called “Rich Dad Poor Dad” by Robert Kiyosaki. The book opened my eyes to the difference between salary and cash flow. Our ability to build wealth and minimize financial stress will be directly proportional to the amount of discipline we are willing to accept (call it delayed gratification). It takes money to build cash flow because you need money to invest. Investments build wealth, not a salary. The salary is the beginning of your investment if you choose to invest versus spend. Set aside a significant portion of your income for investment by having your bank automatically draft it. Live below your means and eventually you will have significant means. Here are some investment options:
Financial Freedom can be built with any one or all of these methods. Personally, I have chosen all 3 because of the lessons I learned in Rich Dad Poor Dad. In the past I have lost thousands of dollars investing (more like speculating) because I did not do my homework before jumping in. Don’t be like me. Do the work to understand what you are getting into and if it sounds too good to be true, it probably is too good to be true. Always proceed with skepticism and remember that nobody cares more about your money than you do and if that is not the case you won’t have much of it to invest.
Mastering these five areas (in Parts 1, 2, and 3 of this article) will help you live a life worth living. It does not mean you won’t have hardships and need to make sacrifices from time to time but based on my experience those that master these five areas are more in control of their destiny.
Understand people and develop emotional intelligence to foster more meaningful relationships. Delayed gratification will ensure deep appreciation for your accomplishments and the accomplishments of others. Personal growth is a key to long-term and sustained success. Develop and cultivate a growth mindset. If you lose your health you lose everything. Stay focused on the three aspects of healthy living: mind, body, and nutrition. If you did a stellar job on the first four, you will have the means to invest. Study investing to ensure you understand the risks and the rewards of your strategy.
The key to mastering each of these skills is to first take responsibility for your future. Taking responsibility will be your most difficult challenge because our society today is hyper-focused on making everyone out to be the victim. The media and the government benefit from our dependence. The media benefits financially and bureaucrats benefit from our votes. I don’t know a single person that is living their best life and is also a victim. The two are mutually exclusive. People that are the victim live bitter and skeptical lives. They frequently seek validation by denigrating others. It is truly a sad existence. Victims can be wealthy or poor because it isn’t about economics. Living a life worth living is largely about contribution. In order for us to contribute at the highest level we will need to master five skills. Mastering starts with responsibility for yourself. These skills can’t be learned for you. Master them and you will truly be in control of your destiny. Focus on giving more than you get and all aspects of your life will grow beyond your wildest expectations. There are no shortcuts but building these skills can help you live a more fulfilled and meaningful life.
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