Why I Changed My Mind About Traditional Investing and Stopped Doing What the Majority Does
Why I Changed My Mind About Traditional Investments
The reason I stopped investing as the majority invests because I do not see a lot of wealthy people amongst traditional investors.
In the group of traditional investors I include people who blindly trust their financial advisors and their 401(k) fund administrators to make investment decisions instead of them.
Furthermore, I neither gamble, nor play lottery. The traditional investment strategies resemble gambling with low chances for the traditional investor to win.
The problem with traditional investments such as 401(k)s, IRAs, stock and bonds lies in outsourcing money management to people who do not care about our money.
Honestly, no one cares about your money except you. Therefore, it is time to get real.
I changed my mind about the 401(k) gradually and cashed out to invest in things that can guarantee me a great return on investment.
The promise that you can get your hard earn money penalty free when you are sixty five rubs me the wrong way.
A lot of sixty five year old people I know have not been outside the United States and barely have energy to enjoy the money.
Furthermore, many of them after they can withdraw from 401(1) have to continue working to sustain the lifestyle they are used or relegate their present lifestyle to that of pinching pennies.
To turn around my thinking and asked myself whether I wanted the outcome they have.
The answer was “No, no way”. I wanted to understand how money worked and how wealthy people create wealth. So I took a deep dive into the rabbit hole of money and wealth.
What I have learned that wealthy people never outsource wealth management.
They have people who assist them but they always make investment decisions themselves.
Wealth includes health. We learned never to outsource our health to others including doctors (or maybe especially doctors) to be gorgeous and radiant in How to Look Good Naked.
Thus, we should not outsource wealth management.
You may not have to manage everything yourself but you are the one to invest how to invest and what invest in. The best and most secure investment in the world is
Invest in yourself first. No, it does not mean buying a ton of stuff that may make you temporarily happy.
I am talking about building your own business whether to grow it and create a legacy for your family, or grow it an sell it to be able not to ever work for money ever again.
Besides, you have a proven success track record and a strong work ethics especially when you are building your own wealth. You can guarantee results and achieve success, not the stock market.
By taking responsibility for your finances and making investment decisions yourself, you are essentially investing in you.
Stay away from hedge funds unless you own one. As a hedge fund business owner, you are the one calling the shots.
Therefore, you follow the mindset I adopted not to fall in the traditional investment trap.
Why Your 401(k) Plan is Not a Path to Wealth
The 401(k) plan was designed to create wealth for people who manage your 401(k), not you.
They cannot even provide a guarantee for the returns they advertise in their prospectus because there is not historical proof of such returns.
You essentially “invest” in the stock market that cannot be timed for certain returns.
Therefore, your investment strategy for retirement resembles that of a person who buys a lottery ticket. His chances probability of winning lies in the range of I in 100,000,000 to 300,000,000 but he takes his chances anyway.
The 401(k) group think makes you lose money overtime and instead transfers your wealth to others.
Why Your House is Not an Investment
You have been approved for a 30-year mortgage loan ata 5.1% interest rate to buy a house of your dreams.
The house costs $300,000.
You put down $60,000.
Over the life of the loan you will pay $252,000 in interest.
If you are in New York, your annual property taxes will be $5,000.
Over the 30 years they add up to roughly $150,000. T
he total excluding maintenance costs arrived at $762,000.
Therefore, you pay 2.34 times more for your investment which makes it a whopping -230% return on investment.
The house you live in is not an asset, it is a liability as proven by the calculations above.
The only way you can cover the costs is by partially or fully renting the house. It will turn it into an asset instead of the liability you have now.
You can produce a better return on investment by building a business and investing in yourself.