A Manifesto for Change
Like the Declaration of Independence, the road to financial independence starts with a rallying cry, a manifesto.
Your personal freedom manifesto is the start of achieving transcendental economic freedom (i.e., generational wealth). And just like our forefathers, achieving the freedom you covet will be about casting off the obstacles while acquiring new habits and skills to achieve this success.
Step 1 – Declare Your Freedom Manifesto
State your mission. What is it that resolve to do?
Sample:
I resolve from this day forward to cast off the chains that hold me back from attaining my full potential and resolve to pursue the skills, develop the habits and adopt the practices that will advance me towards transcendent wealth for the benefit of my progeny and charities for generations upon generations to come.
Step 2 – Identify Your Grievances
What is it that you want to change your current economic situation?
Examples:
- I don’t want my income to be limited.
- I don’t want to say no to family vacations.
- I don’t want to work because I have to.
- I’m tired of weak gains in my investment portfolio.
Step 3 – Identify and Overcome the Obstacles to Achieving Freedom
Common Obstacles
1. No Strategy
There are two types of investors – speculators and builders.
Speculators lose money; builders build wealth. Speculators (gamblers, opportunity seekers) are looking for a get rich quick fix.
Speculators are always looking for their big shot at making lots of money from the hot opportunity of the moment. They have no strategy. Their only strategy is, “Can I make money from this?” Today it’s cryptocurrency, tomorrow it’ll be something else, and yesterday it was dot-com stocks or some other hot concept already forgotten.
Builders (entrepreneurs) think long-term. They are building a personal empire – wealth that will last generations. Builders have a clear vision of what they want and analyze all the factors that will go into achieving their goals.
They prefer tried and true investments that generate income while offering growth potential. Builders weigh the pros and cons of each strategic alternative, and they pick the one strategy most certain to achieve their vision successfully.
2. Shiny Object Syndrome
Builders simplify. They stick to what works. Speculators don’t have any clue what works and have no focus and waste energy chasing one scheme after another. Speculators end up becoming frustrated because they become overwhelmed.
3. Doing What’s Accepted and Safe.
One of the biggest obstacles standing in the way of investors achieving transcendental wealth is sticking to what’s safe and accepted.
Investments like savings accounts, CDs, money market accounts, and annuities are all safe, but none of them will make you money – most not even generating sufficient returns to cover inflation.
The other standard, easy, and safe investment path that mainstream investors follow runs through Wall Street.
If you want safe and comfortable, Wall Street offers a variety of products like mutual funds, index funds, and ETF funds to provide you an “average” return. However, if your goal is to make money, real money, then you’ll have to venture off the safe, beaten path.
The major obstacle to all those who aspire to be transcendentally wealthy and that which they must overcome is that of sameness and conformity. Doing what everyone else is doing is a recipe for mediocrity.
Step 4 – Identify and Adopt the Habits Required for Success.
1. Zig when Others Zag
Instead of Wall Street, the ultra-wealthy invest in what’s uncomfortable, something with the promise of a more substantial reward.
Why do they do this? Because they know what’s safe is not going to cut it. They’ve made their fortunes by not following the herd.
Thomas C. Corley, who spent five years studying rich people, writes in “Change Your Habits, Change Your Life,”
“Failure to separate yourself from the herd is why most people never achieve success … You want to separate yourself from the herd.”
Alternative investments offer investors an investment option that is off the beaten path.
Alternative investments, including venture capital, private equity, private real estate funds, commodities as well as real assets are uncorrelated to Wall Street.
They may make the traditional investor a little uncomfortable as they may be difficult to value and are generally more illiquid than traditional investments. But, they also offer potentially higher risk-adjusted returns.
2. Empire Building through Passive Income.
Passive income is vital to empire building because unless you create a stream of income that makes you money while you’re sleeping, the only way to make more money is to work more hours, and there are only so many hours in the day.
The ultra-wealthy investors have long gravitated towards passive income investments for wealth building. And for wealth building, they look to alternative assets not correlated to Wall Street that not only generate short-term passive income distributions but long-term passive income from appreciation as well.
Here’s how Warren Buffett explained the importance of income-producing assets:
“The ideal business is one that generates very high returns on capital and can invest that capital back into the business at equally high rates. Imagine a $100 million business that earns 20% in one year, reinvests the $20 million profit, and in the next year earns 20% of $120 million and so forth.”
3. Play the Long Game
Don’t be a speculator. Play the long game and let your investments mature so you can reap the benefits. Embrace illiquidity as a means to an end.
Here are some of the reasons you should consider long-term investments:
Consistent Cash Flow
Investing for the long-term in real estate or business allows your asset to gestate and stabilize. Illiquidity affords management the time needed to stabilize an asset before growing into consistent cash cows.
Liquid investments like stocks don’t provide this type of cash flow essential for building wealth.
Appreciation
Cash flow isn’t the only source of profits for investors from productive assets. Appreciation is expected from assets that are producing positive results as the value of the asset increases over time as it proves itself to be a consistent income generator.
Investing for the long-term allows investors to maximize both cash flow and appreciation – both essential for compounding growth.
4. Reduce Outlays
Reducing debt and expenses means freeing up more capital to inject into the passive income machine.
Instead of bleeding cash from paying interest on debt service, the wealthy prefer putting that money to work towards earning passive returns while their underlying investments appreciate.
The sooner that saved money gets invested, the longer it can be put to productive use to grow wealth.
5. Trust Leverage
Trust in the power of leverage – relying on the experience and expertise of others who may be in the best position to maximize specific opportunities.
Leverage your capital across three projects instead of just one by relying on the work of others.
The wealthy can accomplish more than the middle-class – and even the rich – through the power of leverage. They aren’t afraid to defer to someone else’s expertise if it ends up making them more money in the long run or advancing their goals.
6. Optimize
It’s simple. Do more of what works and less of what doesn’t.
Anyone can achieve financial freedom and even transcendent wealth.
It all starts with a manifesto – a mission statement. What do you aspire to? Why do you aspire to it? What is it about your current situation that you would like to change.
What obstacles stand in your way, and what new skills and habits do you need to adopt to achieve the pinnacle of human achievement?
