Welcome to the 121st episode of the Alternative Investing Podcast!
In this episode, I will talk about the three things you can do if you feel like you're running out of time to build the wealth that can provide you with the income and lifestyle you want.
If you're someone who wants some insights on what to do if you feel like you don't have enough time to reach your financial goals, then make sure to listen to this episode!
I consider myself a life philosopher, so this episode is about a philosophical look at how we feel about the way we've created wealth.
If you feel like your runway to where you want to be is running short, or if your decisions haven’t panned out the way you wanted, this is a great podcast for you to tune into.
Today, I want to unpack how you end up where you are and what you can do about it if you want to get your wealth back on track.
Life and Possibility
During the endless lockdowns over the last couple of years, I had these great philosophical conversations with my husband John about life, possibility, and our diminishing enthusiasm to do more as we age.
Part of our conversation is that the life we envision for ourselves is full of possibilities when we are younger, like in our teens or 20s.
There are a lot of options when it comes to careers, partners, and elements of play as well.
There’s also this notion that there’s plenty of time to be a grown-up, get on the mundane aspects of running a household or build wealth.
Regardless of your life choices, you may find yourself in a situation where you can’t take on the risks you might have as a younger person because of your responsibilities.
If I reflect on some yogic views of life’s seasons, sometimes there’s a great peace that comes with just accepting the season you're in.
For example, if you have young children, you're in a constant state of tiredness. So your energy goes up and down with each of those seasons.
The metaphor is that the seasons, ebbs, and flows of life are similar when we think about wealth creation.
When we’re younger, we may have great aspirations of building wealth, similar to life when we think it’s full of possibility and hope.
But as time passes, your sense of capacity to build wealth and your willingness to take on big risks diminishes.
We reach a point where we become less comfortable about pushing outside our comfort zone.
Many people I talk to recognise that they are not where they thought they would be.
Unfortunately, this sometimes brings up a whole range of emotions, such as hopelessness, depression, regret, frustration, and maybe some degree of pain.
You can also have this gnawing feeling like you don't know what to do and thoughts like, “I've left it too late. My possibilities are limited now. I have responsibilities.”
I want this episode to be both comforting and practical, so if you’re interested in making the most of whatever time you want to allocate to wealth building, the three keys I will share with you will be very helpful.
Key Takeaway #1: Be Kind to Yourself
Some of you may groan when I say this, but my first tip is to be kind to yourself.
Regret is a harsh and wasteful emotion. If we’re not careful, it can cloud our beliefs and actions.
It can prevent us from taking on investments that align with our needs and our risk profile.
What I’ve often witnessed with people who feel that they have wasted time or made decisions that prevented them from going to where they wanted to be is that they make decisions to make up for the lost time.
I had a 55-year-old client a few years ago who, during the global financial crisis, had a large portion of his retirement funds wiped out, and he felt that he had to take massive action to make up for that loss.
So he found himself taking $400,000 out of his retirement and investing it in a friend's restaurant.
There's a bit of a running joke that I've heard amongst several finance professionals who've talked about the idea that if you want to lose money full stop, then stick it in a restaurant.
Investing in business ventures, particularly in hospitality, has the potential for a fantastic return.
But there's so much at play in running a business from a risk point of view that it's very easy to lose that capital.
Sure enough, that client of mine lost that capital.
By the time he came to see me, he was in a situation where he was pretty discouraged and had given up hope.
He was looking into returning to fundamentals after trying the high-risk investing method.
He realised that he might not be able to give up working as early as he thought, so what we did for him was to find a plan that was going to get him back on track and give him a much higher probability of success by the time he reached the full retirement age of 65-67.
The other end of the spectrum on this “be kind to yourself” concept is if you’re harsh in judging yourself around the decisions you've made, you can put yourself in a situation where you feel crippling anxiety about taking any decisions.
When you think of poor decisions resulting in a loss, it can make you more worried about making the wrong move, leading you not to make a move.
This is quite common, particularly amongst people consuming mainstream media, where the focus is on stirring the pot and getting eyeballs.
A lot of the news can be inflammatory, one-sided or based on future predictions that may or may not happen.
Recognise that what is done is done, and remember that it's never too late.
I once spoke to a fellow in his 70s who made a series of bad decisions that resulted in him working part-time just to put food on the table for his wife and handle his other responsibilities.
One of our conversations was about the idea that it's never too late and that wealth building is still relevant to you regardless of your age.
Whatever you do, be gentle with yourself, especially if you feel you've missed the boat or can't start learning new ways to grow your wealth at any age.
Focus on what you can do from here rather than what you can't do.
As I said earlier, there’s a tendency that as we get older, our possibilities lessen and our inclination to try new things diminishes.
However, from a wealth-building point of view, there are still opportunities to find investments that align with our risk appetite and will move us towards our goals.
Key Takeaway #2: Recognise the Need to Take Effective Concentrated Action
The second thing I want to say is that you must recognise the need to take effective, concentrated action.
When I say that, I'm talking about how you need to find a way to springboard your success.
It might include paying top dollar for excellent advice or support to grow your wealth.
I love talking to teenagers about wealth because their appetite to grow their wealth is enormous, and they take on ideas like sponges.
They're also quick to recognise that their own families might not have been the best influences.
They have fresh minds, and the trials and tribulations of life haven't polluted them, so they're much more open and optimistic about the future.
One of the things that I say to these teenagers is that when you’re younger, you have plenty of time to figure out the path on your own.
When you're younger, you have the luxury of having the capacity to create your own trial and error.
It doesn't mean you have to do that. But it's the point in your life where you can most afford to do it.
As you get older, it’s very important to leverage the expertise of others to speed up your success.
But of course, you need to tread carefully because there are a lot of charlatans and people out there with misaligned intentions.
You need to put the time in to find the right people with your interests at heart who recognise that there's a responsibility when it comes to helping others.
If you want to create meaningful wealth and are interested in leaving a financial legacy, then you have to plug in people who can light the runway for you.
It’s like having a GPS rather than a wide-open map where you’ve got to figure out the best route to get to where you want to go by yourself.
Another thing you can do is to start cultivating investing rules and get to know what you will and won't do.
The best example I can give you is the people I spoke to recently, with 12 years before needing to retire.
They got a wealth course or a mentor and found themselves putting a very large percentage of their money into a single opportunity and then losing a lot of it.
Recovering from that, both emotionally and financially, has been extremely difficult.
Until now, there's still a lot of unprocessed pain around that particular experience.
That’s why when I say take effective concentrated action, what I would encourage you to do is find people who can help you on your journey.
But at the same time, I highly advise against putting a large percentage of your wealth into a single opportunity at a point in your life where you cannot afford to lose it.
You want to find opportunities to take control of your investment decision-making.
Make small, bite-size investment choices, build your confidence, and see how they pan out.
Then you can accelerate your decision-making on your capital deployment as time passes.
This idea of taking effective concentrated action is about pulling you out of whatever stage of thinking you're at and elevating it.
That can come through mentors. It can come through formal education. It can come through courses, and it can come through masterminds.
There are many ways to level up when taking this effective, concentrated action.
Key Takeaway #3: Be Clear About What Goals You Have
The third key is to be very clear about what goals you have at the point of the journey that you're at.
If you don’t know about the three stages of wealth building yet, I recommend you listen to my podcast episode about this here.
But essentially, there are three parts to the wealth-building game.
The first part of the wealth journey is that you have to grow your capital, and the most effective way to do that is to use responsible leverage to control the largest possible pool of assets that will grow exponentially over time.
That's not to say you can't diversify into different strategies.
I’m saying that you need to consider which investments are most likely to give you growth.
Then, as you get to the point where you’ve got a good pool of capital behind you, you can transition to stage two of the game.
Stage two of the game is focused on changing your trajectory, meaning you need a strong focus or a shift towards producing more income from your assets.
Traditionally, it's easy to get assets that give you growth.
But finding low-risk assets that produce income is more challenging, so changing your trajectory is about exploring that.
Once you've started cultivating the passive income stream you want, part three of the game is about cultivating those annuities.
Again, if you want to learn more about it, check out the specific podcast episode here.
What I want to say about the third key in reference to your runway is that you need to determine whether your focus needs to be on growing your passive income or your capital.
Many people think they must focus on growing their capital instead of getting the income stream they want because the cash flow from investments like shares or property can be very low.
If you start to think outside the square and absorb information about other asset classes like alternative real estate investing, you can develop the cash flow you want quickly with a small percentage of your portfolio.
This is possible within two to five years, provided you have the capital behind you.
A lot of people have created a high net worth simply by owning their homes.
If you have not yet reached your financial goals and find yourself with a short runway, you need to decide if you want to keep growing your capital or use the equity in your home.
Do you feel that the capital in your home represents a good portion of your net worth or wealth?
Do you think it’s a good decision to utilise that capital and direct it into investments that deliver the cash flow?
It can be a little of both, but my point is that if your runway is short, you shouldn’t blindly follow mass thinking that says the only option you have is to buckle down and keep growing your capital.
I’m being extreme here, but as an example, imagine you have a net worth of $10 million and that $10 million of investable capital is earning you 1% as a net return.
That $100,000 is not exactly going to set the world on fire.
The other way to look at things is to imagine you have $1 million earning you a 10% return.
That is also going to give you the $100,000 that you need.
In this last key, your journey is about being aware that you need some capital to create wealth.
If you’ve got a good capital base but not the income you want, then the decision you need to make around how hard your capital is working for you is crucial.
Many people roll through life and accept that they’ve got to tolerate that 1-2% net return on their capital, leaving them no choice but to keep ratcheting up their net worth until it gives them the income they need.
My mission is to change people’s thinking about what’s required to hit financial goals so they can design the life they want to lead.
If you’ve got any topics about wealth building you want me to unpack in the podcast, please contact me at email@example.com.
If you're a business owner feeling frustrated that despite doing everything right in the property investing playbook and you're no closer to financial freedom, then head over to www.inkosiwealth.com to learn more about how you can use alternative investments to catapult your investing income and blend strategies to shave decades off your timeline to financial freedom.
If you're interested in understanding how to create wealth through alternative strategies, please check out my programs, where I help you catapult your investment income and blend strategies to shave decades off your timeline to financial freedom.
Or, you’re welcome to get in touch today, book a call with me, and I would be happy to talk you through it - no obligation!