Tell me, who do you think stands a better chance of safe passage through a dark alley alone? John, the stockbroker who’s read several books on self-defense and the art of the ancient samurai but has never thrown a punch, or Tim, who barely graduated high school, but has walked himself home through the streets of Queens alone since age 8?
In this scenario, everyone picks Tim, but their reasoning is rarely sound. They choose Tim because they assume he’s a better fighter, or is packing heat, but in reality Tim stands a better chance because experience has shown him that traipsing down that particular alley after the sun sets puts him at unnecessary risk, and so he chooses another route. Whereas John feels confident he can defend himself in any situation and therefore walks directly into danger without knowing there’s a well-lit path two streets over which would have been an exceptional alternative.
This happens repeatedly in the great world of finance. People think they know what to do with their money, but usually they’re walking down a poorly lit alley in a bad part of town believing they have all the necessary defenses at the ready.
Most people are trained that financial education consists of a well-padded savings account, a personal residence, and a financial planner who handles their long-term investments. Then they cross their fingers and hope for the best in creating financial freedom.
In 2008, most of those people lost their retirements.
The reality is, if you don’t understand what to do with your money, you are better off stacking your cash under a mattress and sleeping on it than entrusting it to an expert to invest for the long-term in stocks, bonds, and mutual funds.
But, hold up…
What’s more valuable than a mattress full of cash?
A financially educated mind.
To be street smart you must live through experience, to be book smart, you need only take a class. To be financially smart, you’re required to do both.
Classes, seminars, books, and coaching are vital to your financial education, but the gravy lies in learning from people who are successfully doing what you want to do and then implementing it. But you can’t take one class, expect to rule the real estate world, and become the next Trump, Buffett, or Kiyosaki. Real-life financial education is a process that takes time and experience.
So, while you’re becoming financially educated and creating financial freedom…
How do you know the difference between a savvy and average investor?
Educated investors understand a magical component.
Are you ready for it?
The financially educated learn to have other people send them money. It’s a formula that the masses never learn to implement. The savvy investor invests for cash flow, capital gains, and tax breaks in carefully selected areas where they have monitored and predicted trends. Whereas, the average investor often invests solely for capital gains in assets they can’t control. That’s not investing, that’s gambling. You can’t control the market, and you can’t control appreciation. When you have no control, any investment becomes risky.
So what should you do now with that bit of money you have saved up?
You have three options. (If you have no money, congratulations! You can’t mess this up; it’s option 3.)
- Put it under your mattress, do nothing, and hope for the best.
- Send it blindly to an expert and hope for the best.
- Invest in your financial education and predict the outcome.
If you choose option three, and I believe you have, excellent selection!
Here are a few tips to getting started creating financial freedom.
- Invest your time before you invest your money.
- Seek out the most relevant information you can find.
- Start small, dream huge. It’s not get rich quick, it’s get rich permanently. The “get rich quickers” are the ones who get poor in a hurry.
If you invest your time in financial education, you can ensure you’ll achieve your financial freedom while you’re still young enough to enjoy it, and you’ll remain rich even after you’re dead and gone… and your heirs will thank you.