There’s a number of different ways to create wealth in the world – most people don’t even see what’s right in front of their face. Education systems do not teach you any of this – so where do you learn if from? Easy – find someone who’s done it before.
Let’s put it this way – we’re told to go to college and get a job. While you that can make you wealthy over decades, it also only one stream of income, which is also a huge risk! Your “safe and secure” job – how safe and secure do most people feel right now when that’s 15 million plus on unemployment during a pandemic?
Did you know the average millionaire has 7 streams of income? Wait, what? Google it.
We are no longer in an era where we work for one single company that provides for us for eternity. The world is hyper competitive and changes often. You want guarantees? I guarantee that things are going to continue to change and evolve. Pensions are few and far between, almost unheard of. Saving in tax-qualified accounts can only get you so far and have contribution limits. All of that only refers to your ability to save for retirement – what about creating the lifestyle you want to live?
In addition to all that, if you just have a “job” somewhere, what happens when you get fired, downsized, laid-off, furloughed, or world wide pandemicked? (did I just make that up, yes) How are you supposed to save for retirement if you don’t have any income? How are you going to maintain your standard of living?
You must must must have more than one stream of income. Financial independence is about mitigating risks, being tax efficient, growing assets, and multiple streams of income! (did I mention that?)
“Scott, I work for XYZ company and I really like it, what else can I do?”
That’s great! SO GLAD YOU ASKED!
Quick backstory – I got out of college in 2008 (great time to graduate, right?) and there wasn’t much in the way of employment relating to my degree. In fact, I was laid-off from my plan “a” job right after I graduated.
Fast forward a couple of years, I was really successful in a retail sales environment which allowed my to purchase my first home at 26. Solid timing as the market was still receiving from the “bubble” and I got a great deal.
Bubble or not – I had to let you know I owned a house at 26. Where I got it right, is I had several different roommates that lived with me, I charged reasonable rent and they covered the mortgage/taxes/insurance every month – freeing up my “cost of living” to do other things. Back then I wasn’t as forward thinking, so I bought a bunch of deprecating things… you know like cars and what not. That’s a story for another day.
If I COULD do it all over again, I would have bought a Duplex, Triplex, or Quad – WHY? All of these can have mortgages on them, just like a single primary residence can. Then I could have one or more tenants that pay all of the mortgage/taxes/insurance AND more than likely cash flow on top. Since they are separate units, you can charge more for rent. The best part is that someone else is paying for YOUR asset and you’re living for NEAR FREE.
When you’re ready to move on, you can continue to rent them out or liquidate, getting all the equity out that someone else paid for and move on. I’d keep and continue to rent it, then buy more. Oh, wait – that’s what I am doing. (aforementioned house is now a part of my rental
portfolio)
Before you buy your “dream home” or even your “first/temp” home – I would strongly recommend that you explore the above option. Yeah, I hear you – you don’t want to be a landlord, got it. Hire a property management company for usually 10% of the rent (accurate as of time of writing) and be completely hands off.
Guys, you have to begin to think outside of the box. Lost? I got you – I’ve helped a ton of my clients through this EXACT scenario.
Here’s to your wealth and success….and multiple streams of income!
Let’s gooooo!
-Scott
Human Capital
