Going Down that Rabbit Hole of Wealth Building...
Take the fish, or Learn to fish?
DISCLAIMER: This post is part of my own little way of learning. I am simply regurgitating what I am only starting to look into as a means of remembering what I've learned.
We learn through repetition… One of the best way to remember something is by reading or hearing it more than once, so here it is
Do not take what I say as financial advice, do your own research or ask a financial advisor.
The crazy rich always talk about defense before offense, meaning protection of assets. They always look to shelter their wealth from being drained away by the many wealth destroyers.
Some Examples of Wealth Destroyers:
- Taxes, probably the biggest of them all.
- Service and Management Fees
- Bad Debt and Spending
- Lawsuits
If you tell me that you actually want to pay taxes, I won’t believe you and please refrain from commenting unless you have something constructive to say… . Thank you
Ok so I’ve been listening to a few different podcasts on the subject of money and wealth transfer… Everyone says there is a definite economic shift coming sometime, maybe sooner than we think! I say they can’t be all that wrong, throughout history there has been many such transfers. If we stay vigilant, educate ourselves and learn to keep our emotions in check, we can make sure we stand on the right side of the shift.
In this shift, there will be more than one vehicle to take advantage of, and the best part is that with this internet we all love so much, we can easily find investments that meet our principles.
We don’t have to give our money to any cause we don’t believe in.
Let’s not forget the amazing technological possibilities of cryptocurrencies, we have for once an advantage over the banks!
Plugging the leaks:
The analogy I just heard from host M.C Laubscher, creator and host of the Cashflow Ninja Podcast is simple and makes it easy to embody. I’ll try not to butcher what he said too much:
If you have a bucket full of holes, there a couple ways to keep it full of water. One way is to simply make sure you plug the holes and the other is to continuously fill the bucket.
Obviously, the first option is what we need to do to stop losing water… PLUG THE CASHFLOW LEAKS!
I think I’ve done ok, living my life frugally, I've always made sure I’m not spending money where I don’t need to… looking for cheaper insurance or ways to have little rent to pay or having more home cooked meals than going out to dinner on the town, and so on, and so on.
Warren Buffet said this about money:
The first rule of money, don’t lose any.
The second rule of money, don’t forget the first rule.
I’m pretty good at not losing money but I’ve never invested all that much, I mean I purchased a two bedroom apartment because I didn’t want to be alone paying the mortgage… it’s like a small scale two family investment property. But real investment, the type of wealth building that can offset the cost of getting old in the USA, is finally getting my attention… especially now that there’s an upcoming shift in the economy!
Even though I am aiming for a homestead life and designing a strategy around needing less money, less work and more time, I am still interested in making money! It’s sort of the idea behind The Permaculture Of Things... Which I’ll have to go in depth one day for you (when I can wrap my head around it!).
I still have have lots of holes to plug, but in the meantime, I’d like to look into two investments that I found interesting listening to my podcasts.
As I understand these:
One is a bit morbid, it’s buying Someone Else’s Whole Life Insurance Policy… Some life insurances are considered assets. When a person cannot afford their premium payment anymore or for whatever other reason they decide to cancel they have the right to sell the asset at a higher cost than forfeiting to the company. The investor buys the policy and collects the benefits when the original owner passes away… I’m sure it comes with many problems and complications but this is an investment that should be sheltered from stock market crashes, as long as the insurance company stays afloat.
Another way to stay clear of stock market crashes: Dividend Paying, High Cash Value Whole Life Insurance Policy. In this vehicle, you pay a premium, that builds cash value. After accumulation, you can borrow up to %90 of your cash value from the company, not your policy. Put money in, collect dividends (not guaranteed), skip the banking institution to borrow money for whatever you want it for, repeat or keep it going... I don’t know it sounds really good, it makes sense, if we look at it as a vehicle for wealth building, where you can purchase an income producing asset of your choice (again not at the mercy of a bank’s underwriter… you have the say), pay back the loan and do it again!
I know these kind of posts can create a lot of emotional debates, so please I’d like to repeat it one more time, this is not investment or financial advice at all. I am only repeating what I’m trying to learn from listening to a few anarcho-libertarian wealth specialist.
I've heard much more than I can digest so far, and this is all I can do for now… my head is starting to spin. I feel like my words are starting make nonsense!!!
Spread your wings and fly to 'where your heart takes you.
I have a whole life policy just for helping my heirs after I’m gone if I’m older than my term life policy allows by then. I’ve never thought of borrowing against it but good to know it’s an option. Though there was an insurance broker who commented on someone’s post recently saying it was a terrible deal.
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Heehee, that may have been my post! I agree, it is a very bad idea if the goal for the whole life policy is to help your heirs... @rollingthunder is absolutly right. Why would you ever borrow against that help for your heirs? It makes no sense.
The way, I've been told makes sense as a vehicle for building wealth a lottle more sheltered from those destroyers than traditional banking
Cover the basics first :) plug those holes, good analogy
Yeah, got to keep that bucket full of water!
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I am terrible at finances and I have looked everywhere so I have to keep working when really I could have finished a couple of years ago . trying though. I'm not sure I could take any big investment risks because I just don't understand it enough.
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I'm trying to understand it myself. That's what this is all about, but I'd lile to have it relate to living off grid (ish) and the homestead/traveler life somehow. It's possible, I'm sure of it.
Plugging the leaks so that your monthly expenses are less than your income is certainly the correct first step. If you can do that then you are ahead of most people. If you can start when you are 25 and keep it up until you are 65 then you are in way better shape than most.
The usual advise is to keep saving until you have about 3 months of living expenses set aside. None of that money should be invested, because any investment will have risk. Even keeping cash under your mattress is too risky for at emergency fund. It really needs to be in a FDIC backed savings account.
Anything saved over the 3 month emergency fund could be invested. For young people who are looking to invest for 10 years or more, it is hard to beat stocks if you have the disposition for it. Some people are likely to panic during a sell off and bail out.
I'm going to upset some people by saying that cryptocurrencies don't really count as an investment. They just don't have a reliable risk/return ratio that would make them a real investment. I try to think of my crypto "investments" a ticket to ride the most exciting financial roller coaster ever invented. It pays off in thrills.
Oh my god, you're so funny with that financial roller coaster ride!!! Some people get upset with the idea of speculating on crypto (it's not what it's intended for), I don't believe anything that doesn't pay a dividend of some sort is an inbestment... it's gambling!!!
Thank you for the advice on saving, I think we're close to our 3 months now! Still plugging away though, I have one gym membership I need to cancel still, thanks
Crypto is better than gambling on the lotto or in a casino, they both guarantee a loss eventually. It is more like speculation.
STEEM is different than most cryptos, though, because you can use it every day. It is kind of like buying a painting that you enjoy looking at. If its value goes up then that is great, but you can get your money's worth by just enjoying it.
Haha yest so true, you can vet your money's worth by enjoying it! The incentive of making STEEM has really pushed me or inspired me to write about many things that I had said I'd do one day... it's belping me make my dreams come true.