How big are you thinking when it comes to your money?
Well, Hi everyone, and welcome to another wise money tools video. Glad you could join me today, so I got a question for you. Do you think big? I mean, do you think about having more money, more peace of mind, more freedom to choose the lifestyle that you want to live? You know, I listened to a lot of advisors out there, and how they sell their services. I recently watched one advisor talking about the core elements to retirement planning, the Forry focused on where a 401k, Social Security, health care and investments. I listened to another guy talking about how to invest thousand bucks, then he went on to tout by mutual funds and dollar cost averaging as the keys to financial success.
Another advisor was discussing how you need to have a retirement plan. And just for a few thousand bucks, he would design one for you, and the list goes on. However, in all these sales pitches, none of them ever really teach you how to think big. You know, I’ve said for years, that if financial planning actually worked, more people would be retiring with more money, more peace of mind, more freedom, to choose the life of their choice. No one ever thinks big, including advisors. In fact, they may be the worst. Now I realized one of the big mistakes people make is they start thinking about retirement. And how that’s going to turn out for them about 10 years before its time, somewhere in their mid 50s, they start to get serious. That’s not early enough.
I really don’t like talking about retirement in the strict sense of the word. You know, retire at age 65. I know there are a lot of people who want to quit their 9 to 5 job at some point. And I get that, however, a lifelong pursuit from the first day you get a job should be to take an active interest in your money and investing. By doing so you can quote unquote, retire much earlier. It’s something you can do and enjoy the rest of your life. If you look at wealthy people, they don’t simply retire from their day to day job. And that’s it. Sure, they may play more golf or tennis, travel, enjoy their family. But there’s always something that keeps them busy. They keep in stay active with their mining, they’re continually looking for opportunities to invest.
They may invest in a business, or on some commercial property, or maybe some rentals, they’re still looking to deploy their money into other investments as opportunities come along. They may still be a part owner in a business and they might sell part of it. And just to stay busy and active for a while. Maybe it’s a family business, they still stay involved. And again, active in some way. But the common thread is there, they’re still working. They’re working their money and their investments. See, to me the biggest mistake that anyone can make is turning control and the investment decisions over to a financial advisor. Not understanding or being part of the investment process to me its financial suicide. A financial advisor doesn’t think big. They don’t want you to think that you’ll ever do better than the mutual funds they pick for you. I’ve said for many years, there’s no such thing as a mutual fund millionaire.
Now sure there are millionaires that may own mutual funds. But they did get that way solely by buying funds. Most of them owned a business or had some sort of investment that paid off substantially. Others had high paying jobs such as a medical or dental professionals, and were able to save a substantial amount of money. But the truth is, it’s because of the amount of money they were able to bring to the table from some other part of their life that made them millionaires. No one put 100 bucks a month than a mutual fund and became a millionaire. Some were, Somehow they took some capital they saved and went to other investments. Buffett did it by buying stocks when they went on sale. I know others who’ve made money investing in real estate, they started small with one project and maybe even with a group of investors.
And then they were able to build their net worth with more and more projects. I’ve many clients that own or own successful businesses. Some built from scratch, some franchises, some they bought a businesses that were for sale. And again, the list goes on. My point is, all I want you to do is think big. Now, here’s a litmus test for you. If you’re gonna have to rely on or you’ve resigned yourself to having Social Security, help support your retirement years, then you didn’t think big enough. You probably relied on a financial advisor who told you that investing yourself is too hard. And that you’re better off with them calling all the shots. Just by mutual funds, and invest your 401k or let us actively manage your money and for a small fee we’ll make sure you’re on the right track.
After all, they are the professionals, and they know what’s best for you. They want you to simply give your money to them. And use social security as a lovely retirement. How depressing? Its death by thousand cuts to me, look, investing isn’t that hard. But you need to be willing to learn and educate yourself. And then empower yourself and start making your own financial decisions. If you aren’t willing to do that, then Social Security may be your destiny. As I said earlier, if financial planning was really working, more people would be retiring with plenty of money and not having to rely on social security at all. When you get that Social Security check, you should literally be able to spend it frivolously give it away, or just go have some fun. It should not be the lifeblood of putting food on your table. So how do you get to where social security is a bonus not a necessity? Well, first off, you’re gonna need some capital.
All right, you may have it now. You may not. It’s too bad. But way too many people have their capital tied up in 401k is in IRAs, where they can’t touch it until they’re 59 and a half. Now there are some rules that have changed and can’t allow you to self direct a lot of those funds, it might be worth looking into. And we’ll talk about those in the future. Most likely your 401k or IRA or mutual funds being deemed each year with costs and fees that can be again costing you years of retirement income. JACK Bogle of Vanguard funds, he put it this way, let’s assume the stock market gives us 7% return over the next 50 years. At that rate, because of the power of compounding, each dollar goes up to $30. But the average fund charges you 2% per year in costs, that drops your average annual return to 5%. At that rate, you only get $10 for every dollar.
So $10 versus $30. All because of fees. You put up 100% of capital, you took 100% of the risk, and you got 33% of the return. This is what fees are doing to you. It’s killing retirements. Now, here’s another interesting fact 92% of Americans don’t know the costs involved with their 401k and other investments, and 72% believe they’re not paying anything. Well, obviously that could not be further from the truth. Okay, when using your banking system, what we teach is this, your private bank is a great location to store your capital. Why? Because opportunity sadly, don’t come along every day. So it’s imperative that you have a place to continually add money to compound and grow your money without taxes being a burden. Then you need to have access to your capital when those opportunities come along.
In the meantime, while you’re building your capital pool, it’s time to learn and educate yourself. You don’t have to be a financial genius. But you need to understand what it is that you’re investing in. Being able to read a few financial statements if you’re looking at a business or stocks, understanding how real estate works, maybe you’re looking at a rental or a commercial building, knowing how to calculate your cap rate depreciation, estimating maintenance and expenses. That’s a good start. You may want to do some lending. That’s a big thing right now. And you can do pretty decent without having to make a long term commitment. Finding the right lending opportunity and getting a sense if it’s viable investment. And knowing how you’ll get paid is a really great start.
Anyway, though there are several ways to get this ball rolling. What’s nice is that if you do this right, maybe you’ll only have a good opportunity to come along every 3, 5 or more years, who knows. But when they do come along, it’ll propel your wealth substantially. In the meantime, build your capital, get lots of money at your disposal and be ready. This literally is how Warren Buffett paid his billions. He did not go to a financial advisor by mutual funds. In fact, he’s completely opposed to that. He says if you aren’t willing to learn and empower yourself, then simply buy the low cost index fund. And he’s right. In a recent report, the SP 500 index be 95% of the actively managed funds for last 15 years. However to be to really build your wealth, we need to think big.
Let’s not even let Social Security be in the conversation. That’s just fun money to spend, but not your lifestyle. And finally, let’s have some fun in retirement. Stay involved in your investments, search and research investments that you’re interested in. And yes, even love what you invest in. Only get involved with investments that hold your interest and attention and that will be a good start. Now, I want you to have the confidence that you do don’t need to pay fees and expenses to the advisors that again is death by thousand cuts. It’s not working. And it is a minimalist retirement view. Enjoy it. Never worry about money, really make them your golden years. For you younger ones out there, you may retire from your regular job early. Let your investments and the enjoyment of building your wealth give you more freedom much earlier in life. We’ve given financial planning 60 plus years and it’s not working.
Remember what Einstein said the definition of insanity is doing the same thing over and over and expecting a different result. The wealthy did not get that way by doing what everyone else is doing. And doing this same thing over and over hoping the result will changed. You have to do something different yet something that is proven to work. There are a lot of good people that we can copy. So let’s go have some fun. Build your banking system get your capital ready to deploy and that will eventually build your wealth. And yes, I want you to think big. Okay has always if you have any questions, send them to questions at wise money tools.com. If you want to do a strategy session well let’s do it. Just click on the link below. set up a time that works for you. Don’t forget to subscribe and never miss a video and I will see you next time. Until then. Take care.