Something that has been on mind a lot lately is the idea of building wealth and how exactly to go about doing that. It feels like almost every day that I have a different friend reaching out to me and asking whether they should invest in Bitcoin, rental properties,Tesla, and the list goes on and on. My answer is always the same.“I’m not sure.” I don’t say this because I don’t know whether those are good or bad investments, but because I have no idea whether those are the right investments for that person. Without knowing their life, their background, whether they have any debt, or their tolerance for risk, it’s impossible for me to tell them what to invest in. The truth of the matter is there is not one universal way for everyone to build wealth.
Let me break this idea down by drawing a parallel to a different industry.. For those of you that know me, you know that the only other thing I love as much as finance is fitness. Finance and fitness are built on many of the same principles, which make fitness an easily digestible way to understand financial principles.
Imagine you are someone that wants to get in better shape. Your first step would be to reach out to a trainer and ask for help. In response, the trainer would start by asking what seems like a million questions about you. Do you have past injuries? Do you like to workout by yourself or in a group setting? Do you prefer swimming or biking or running? The point of asking these extensive questions is to get to know you better. What you like, what you don’t like, what motivates you, what your struggles are, what your time constraints are, etc. Your answers to all these questions helps the trainer to come up with the best way for you to get physically fit. Sure, maybe the most efficient way is to lift five days a week, do cardio three of those days, and to eat a high protein/low carb diet. But, just because that is the most efficient way does not mean it will be the best way for YOU to reach your personal goals. If you hated every step of that process to getting fit, you most likely would not end up sticking with it long term. The goal is for you to find the most enjoyable way for you to get physically fit. It’s great that your friend did it through swimming, but just because swimming worked for them does not mean that is the right way for you to reach your goals
This idea holds true in finance as well. Maybe starting a business is the best way for one person to build wealth, but if you are someone who would hate the day-to-day of running a business, then it is not the best way for you to build wealth. Maybe owning a slew of rental properties is a great way for one of your friends to build wealth, but if you would hate dealing with renters and the upkeep of the properties, then maybe it is not the best way to build wealth for you. Financial planning is all about understanding yourself and your vision, so you can find the most efficient way for YOU to build wealth and achieve your goals. This is why it can be dangerous to listen to people you know and blindly take their advice on the ways they choose to build wealth. Just because something worked for them does not mean it will automatically work for you. We are all on a different journey to reach a different destination. You need to make your own choices and build the life you want the way that works best for you.
Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining to your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimers page.
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