When I was a new, young, and uneducated investor, the only advice on investing I could seem to find was to buy stocks and bonds. There were different models, such as put 80% of your funds into stocks and 20% into bonds if you’re under 25, and then as you age, adjust the allocation for risk to be heavier in bonds. The problem with this model isn’t that stocks and bonds are bad. They have certainly proven themselves to be great investments and many people have stored and grown wealth with both assets. The big fucking problem is that Wall Street tells you ONLY to buy these 2 assets. It comes down to 1 thing, and 1 thing only: fees. Of course Wall Street is very smart, and also very greedy. They can only charge fees and monetize stocks and bonds, therefore for them they’re going to tell you all day long these are the only 2 things to invest into.
Stocks and Bonds Aren’t Bad. The Asset Allocation Model is the Problem.
In actuality, the real problem isn’t that these are bad assets, the real problem is the asset ALLOCATION model. There are many, many other great alternative assets. In fact, out of my entire net worth, as of this writing none of it was created in stocks or bonds. My assets are in private businesses, real estate, both single family rentals and then large self storage projects, high cash value whole life insurance, private money loans, mortgage backed notes, cryptocurrency, & precious metals. I have recently invested into stocks but not the way the typical person does. There are multiple different asset classes and all of them have their pros & cons. Some are very safe, generally low yielding, others are volatile yet can provide explosive returns.
The reason asset allocation is so important is that if properly diversified, you are creating indestructible wealth because at any time, an event can happen that severely hurt a particular asset class. For example, in 2000, the dot com bubble burst and pretty much all tech stocks got hammered, including the overall market as well. However, if you had rental real estate, people needed a place to live and that event did not affect most Americans. So they continued to pay and although it’s possible your house value dropped a bit, it didn’t affect your monthly cash flow coming in, so anyone could ride it out as long as they didn’t sell.
Why Cryptocurrency Exploded During the Pandemic.
In the 2019 pandemic, those in real estate realized that their monthly cash flow was not quite as indestructible as they thought. Tenants, both residential and commercial, had incomes and sales crushed by thepandemic through forced closures and fear. The landlords owning the property – certainly not all but many – had slow paying or non paying tenants that they couldn’t legally evict because laws were quickly passed protecting them. However, earnings stayed strong in the stock market and although it hit a temporary sell off, it has grown to record highs even with the pandemic in full swing.
And, while all of this was going on, my high cash value life insurance policy kept chugging along at its boring, predictable 5.5% internal rate of return, with the death benefit to my wife & kids firmly in place. And while tenants decided to either not pay their rent and game the system, or did their best to pay but couldn’t, cryptocurrency went parabolic – meaning, it exploded.
There’s a high likelihood that if you are invested in any of these assets, at some point along the course of your lifetime they will see either a crash or major disruption. What I want for you is that it doesn’t disrupt YOUR LIFE! I want you to be in a position when the stock market drops 40%, you can say “oh, isn’t that interesting”. I want you to say when cryptocurrency drops 50%, “I don’t care, that much”. Because when crypto dropped, your tenants were paying, and your private businesses were still selling goods and services, and you had plenty of cash flow coming in. When the stock market dropped, you don’t care because your self storage syndication deal is growing at 25% annually since no one is cancelling their $100/mo storage locker. When everything drops maybe all at once, you are dancing because everything just went massively on sale and you tap the liquidity in your whole life cash policy and start buying up great assets at low prices. And if the shit really hits the fan, then you aren’t thriving but you’re in the best position possible because you’ve got a 1 year food supply, plenty of guns and ammo, a generator for your whole home, security system, and gold & silver. That’s what I want for you – Indestructible Wealth.