RPF0569-You_Dont_Have_to_Be_Smart_to_Become_Financially_Independent...But_You_Cant_Be_Stupid_pt._3_of_5
00:00:00.000 | Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge,
00:00:04.320 | skills, insight, and encouragement you need to live a rich and meaningful life now, while
00:00:08.400 | building a plan for financial freedom in 10 years or less.
00:00:11.600 | My name is Joshua.
00:00:12.600 | I'm your host.
00:00:13.600 | And today we continue with part three of our five-part series called, "You Don't Have to
00:00:16.920 | Be Smart to Become Financially Independent, But You Can't Be Stupid."
00:00:22.200 | And today I want to talk to you about your investments.
00:00:24.880 | Part three of my framework for wealth is invest wisely.
00:00:28.000 | By way of reminder, part one is increase income, two is decrease expenses, and three is invest
00:00:33.160 | wisely.
00:00:34.880 | You must invest wisely in order for you to become financially independent.
00:00:42.260 | But here's the great news.
00:00:44.360 | Wise investing is not that hard to do.
00:00:50.780 | The information is easily available on how to be a decent investor.
00:00:55.880 | The information is relatively straightforward.
00:01:00.360 | All it requires is for you to be thoughtful and careful in your decision-making.
00:01:05.640 | Now the first thing that you'll need to consider when it comes to investing wisely is you need
00:01:09.920 | to consider what type of investments would be best for you.
00:01:14.080 | There are some people who are very well-suited to investing in stocks.
00:01:18.520 | There are some people who are not well-suited to investing in stocks.
00:01:22.200 | Do a careful analysis and try to figure out what would be best for you.
00:01:27.960 | If you enjoy your job, you find your job to be meaningful and you're earning a sufficient
00:01:32.940 | level of income there, you like to spend your weekends down at the lake, and you don't have
00:01:38.400 | any other major business interests, you're not that interested in buying houses, then
00:01:43.280 | go and just invest money into mutual funds in your 401(k).
00:01:48.280 | The fundamentals of stock investing are very simple.
00:01:51.720 | Buy some mutual funds.
00:01:53.480 | Choose low-cost mutual funds.
00:01:55.520 | Buy them and don't ever sell them.
00:01:58.560 | Basically it's as simple as this.
00:01:59.720 | If you pick an index fund in your 401(k), hopefully there's a good one with a broad
00:02:04.040 | base, something like a total stock market index fund is really sufficient.
00:02:09.280 | Keep your expenses low and then don't open the statement so you're not tempted to sell
00:02:13.280 | it and just put money into it year after year, decade after decade, barring some world-changing
00:02:19.920 | calamity.
00:02:21.680 | You're probably going to be really rich in a couple of decades.
00:02:26.040 | You don't need anything more than that.
00:02:28.440 | It's that simple.
00:02:30.600 | Now if you're not well-suited to stocks, you have personal reasons that you don't particularly
00:02:34.600 | care to invest in the stock market, I, as one financial advisor, I don't think you're
00:02:39.000 | stupid for that.
00:02:41.280 | But I do think that you should consider your approach and not just abstain from investing
00:02:46.080 | in stocks and have that automatically mean that you abstain from investing.
00:02:51.080 | I think you should just choose another area of investment.
00:02:55.440 | Let's talk the other simplest area of investment, real estate.
00:02:59.280 | You don't have to be a genius to put together a reasonable real estate portfolio.
00:03:05.440 | Here's a simple suggestion.
00:03:06.960 | Buy a starter home when you're young and then when you need a bigger home, if you've decided,
00:03:11.440 | just keep the starter home, rent it out.
00:03:14.440 | When your mother-in-law's cousin dies and you become aware that the house is available,
00:03:18.600 | go ahead and buy it.
00:03:20.000 | It's probably going to be fine.
00:03:22.240 | If you'll just put together a portfolio of three, four, five houses, you can manage them
00:03:28.560 | yourself and go ahead and finance them and then pay them off over time.
00:03:33.880 | You can become financially independent and have a very stable investment portfolio, especially
00:03:39.400 | if you are the common man.
00:03:41.440 | The common man frequently has the skills or the network to fix the things that go wrong
00:03:45.440 | on a house and not get taken to the bank.
00:03:48.240 | I try to get so many of my friends who just don't seem to think about it to say, "Listen,
00:03:53.520 | just buy some houses."
00:03:55.440 | The average family, if they own five single family houses, would be financially independent
00:04:01.040 | beyond their wildest dreams.
00:04:03.160 | Well, guess what?
00:04:05.440 | Buy a house, pay it off in 10 years.
00:04:08.680 | Buy another one, pay it off in 10 years.
00:04:11.200 | Buy another one, pay it off in 10 years.
00:04:14.920 | Whatever works for you.
00:04:16.080 | You can pay them off faster.
00:04:17.800 | But if you'll just buy some houses and let your tenants pay off the mortgages for you,
00:04:22.280 | you'll wind up financially independent.
00:04:24.840 | We move on to the third category, some other type of investment, some business investment
00:04:31.800 | or some other class of assets that's not so common.
00:04:38.760 | If you want to buy steers and fatten them up and sell them at the market, go for it.
00:04:44.440 | That's a great investment if you know what you're doing.
00:04:47.980 | If you want to buy cheap cars and fix them up and get a dealer's license and sell them,
00:04:52.640 | go for it.
00:04:53.640 | That's a great investment.
00:04:56.100 | If you want to buy old guns and fix them up and refinish them and sell them, go for it.
00:05:01.520 | That's a great investment.
00:05:03.680 | Don't let someone out there tell you that you can't look at an asset and say, "This
00:05:08.480 | is underutilized," and fix something up and sell it.
00:05:11.960 | Use your money and go for it.
00:05:14.880 | Or with regard to your business, if you're running a business and you see that you have
00:05:18.680 | a lot of profit potential in that business, go for it.
00:05:21.120 | Invest in it.
00:05:22.780 | Just don't be stupid.
00:05:24.680 | Don't always put all your money in the business.
00:05:27.280 | Don't always put everything on the line for it.
00:05:30.540 | Don't go deeply into debt.
00:05:32.760 | Just think about investing wisely.
00:05:36.080 | I get really annoyed when people just think there's only one way to invest.
00:05:41.440 | There are many ways to invest, but you've got to invest.
00:05:46.360 | If you're going to become financially independent, you've got to invest.
00:05:50.400 | Here's what I've learned.
00:05:51.840 | A lot of people make stupid mistakes when it comes to investing.
00:05:55.400 | I've made my share of stupid mistakes and I'll probably make them again.
00:06:00.880 | You know how most stupid mistakes are fixed?
00:06:05.760 | Just give it a little bit of time.
00:06:08.100 | If you'll give some time to a stupid mistake, often the markets change.
00:06:13.800 | Often you'll be able to right the wrong, fix the problem.
00:06:17.880 | Just give it time.
00:06:18.880 | I don't know how to give you more specific advice than that.
00:06:25.040 | You choose what's an appropriate avenue of investing for you.
00:06:32.640 | Many, many plans will work if you will work them consistently.
00:06:38.540 | That's the closing theme I want to mention to you.
00:06:41.840 | When I was younger, I was super interested in investing in stocks.
00:06:45.000 | I reviewed all kinds of plans.
00:06:47.400 | I reviewed all kinds of strategies.
00:06:50.080 | I was always trying to figure out what's the best strategy.
00:06:53.600 | There might be the best strategy out there that somebody else more competent than me
00:06:57.600 | can know.
00:06:59.080 | Here's what I concluded.
00:07:01.200 | Almost any strategy that is proven, that is not crazy, will work if you'll just do it
00:07:07.800 | consistently.
00:07:09.720 | But very rarely do you find a person who has the character and the tenacity just follow
00:07:16.280 | the strategy consistently.
00:07:19.920 | Same thing with real estate.
00:07:21.560 | Same thing with business.
00:07:24.360 | You can get rich buying McDonald's and growing them.
00:07:31.120 | But it's rare to find somebody who's able to apply themselves to such a simple thing
00:07:35.640 | consistently.
00:07:38.320 | You can get rich buying a local Subway franchise or whatever franchise that you're interested
00:07:43.760 | in.
00:07:44.760 | You don't need a great business idea.
00:07:46.960 | You just need to come in and say, "This is my avenue for investment.
00:07:50.980 | This is the business I've chosen.
00:07:52.400 | I'm going to follow the manual."
00:07:55.920 | So pick a strategy and do it consistently, reliably, diligently over time.
00:08:05.840 | And if you'll do that and stick with your investments and don't be stupid, you'll become
00:08:13.760 | wealthy.
00:08:15.880 | Thank you for listening.
00:08:16.880 | You've honored me with your time and attention, and I'm grateful for that.
00:08:21.100 | And I hope that I've effectively served you today with some ideas and strategies and tactics
00:08:25.940 | and techniques and tools that will help move you towards your goals.
00:08:30.660 | Before you go, three simple requests.
00:08:33.040 | One, if there's an idea that's been helpful to you in today's show, make a plan to take
00:08:38.800 | action on it.
00:08:40.840 | Listening does lead to learning, but learning in and of itself doesn't automatically lead
00:08:46.240 | to a life change.
00:08:48.560 | It's action that leads to a life change.
00:08:52.560 | So take action.
00:08:54.200 | Two, take something that was helpful to you in today's show and share it with somebody
00:08:59.880 | that you care about.
00:09:01.440 | I'm depending on you to be a co-laborer with me in helping me to propagate the message
00:09:08.640 | that I'm seeking to share.
00:09:11.100 | That helps the person that you are engaging with, and it also helps you because teaching
00:09:16.960 | others is one of the most effective ways for you to learn and for you to cement your learning.
00:09:23.800 | Three, if there's an idea that's been specifically helpful to you, and if you're gaining financial
00:09:29.080 | benefit from Radical Personal Finance, I'd be grateful if you'd consider paying me for
00:09:33.800 | this work voluntarily.
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00:09:58.240 | results in your life, I'd be grateful for your financial support at radicalpersonalfinance.com/patron.
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