Not too long ago, I was an average investor who adhered to
conventional investment practices like most people. Almost all of my
investing revolved around stocks, bonds and following the portfolio
advice of the experts on TV and in financial publications. Then I
noticed a problem and the problem was that it wasn't working. Not only
that but my account was not even keeping pace with the overall market
and I was paying fees to people who didn't really know any better than I
did. In one case a broker I worked with talked me out of a great trade
that I wanted to make for another company in the same sector. It turned
out that the company that I wanted to buy ended up getting bought out by
another company at a much higher price. The company that my broker
talked me into buying eventually went bankrupt. In fact, every time I
talked to him, he assured me that their business was fine. This was a
turning point for me to learn to invest on my own.
As I immersed myself into investment education, I started learning a lot of tricks and tips to make money in other areas like real estate and options. I was able to make decent money on my own by investing in these areas. Also, I was able to meet other investors through this process and that's when I had an epiphany. You see, I began to realize that many investment professionals are spouting the same worthless rhetoric. It occurred to me that it was because they all have to pass the same tests to certify as investment advisors and brokers. For instance, brokers have to pass the series 7 exam while financial advisors usually test and pass the CFP program. The problem is that these exams all require you to regurgitate the same meaningless data. This data is flat out wrong and many times outdated. For instance, it will grill into you that you can average about a 7-8% return in the stock market for long periods of time. This is also what most financial advisors will tell you since this is what they learned from their financial class and as an answer to an exam that they needed to pass. It's not that they intend to give you poor money advice; they simply don't know any better because they're just recounting what they've been told is true. It's this grave error that is leading people down a destructive path. In fact, if this advice worked, then why is it that I see so many retirees still working at grocery stores in their golden years? It was at this point that I realized that it was all wrong. I knew from my education that diversification was more than just owning different stocks and bonds in a retirement account. Then something weird happened...
I actually started getting into real estate and rubbing elbows with very wealthy people. I found out that they didn't do any of the things that the financial gurus tell us to do. They owned lots of gold, silver, rare coins and antiques. They also owned businesses and real estate. They could care less about retirement accounts because they were only concerned about passive income. They owned interest in tax liens, oil and gas companies and owned whole life insurance policies that pay dividends on your highest historical balance even when you take a loan out from the policy. The conclusion was simple; these wealthy people know about things that I had never heard of. They also know more about tax advantaged investments than most accountants. My mind was blown.
So I end with the question that I started with. Who do you get your money advice from? Is it from traditional Tom who is a licensed broker and a CFP or is it from rich Rick who owns rental properties, businesses and doesn't seem to really ever work? It's so obvious when you think about it that the best money advice would come from someone who is already wealthy! So that's my answer to all of you out in the blogosphere. Find a rich person that you know, take them to lunch and ask them how they invest their money. If you don't know anyone who fits the bill just find someone who is wealthier than you to question. I guarantee that their answers will astound you, and don't worry because they love to talk about money.
As I immersed myself into investment education, I started learning a lot of tricks and tips to make money in other areas like real estate and options. I was able to make decent money on my own by investing in these areas. Also, I was able to meet other investors through this process and that's when I had an epiphany. You see, I began to realize that many investment professionals are spouting the same worthless rhetoric. It occurred to me that it was because they all have to pass the same tests to certify as investment advisors and brokers. For instance, brokers have to pass the series 7 exam while financial advisors usually test and pass the CFP program. The problem is that these exams all require you to regurgitate the same meaningless data. This data is flat out wrong and many times outdated. For instance, it will grill into you that you can average about a 7-8% return in the stock market for long periods of time. This is also what most financial advisors will tell you since this is what they learned from their financial class and as an answer to an exam that they needed to pass. It's not that they intend to give you poor money advice; they simply don't know any better because they're just recounting what they've been told is true. It's this grave error that is leading people down a destructive path. In fact, if this advice worked, then why is it that I see so many retirees still working at grocery stores in their golden years? It was at this point that I realized that it was all wrong. I knew from my education that diversification was more than just owning different stocks and bonds in a retirement account. Then something weird happened...
I actually started getting into real estate and rubbing elbows with very wealthy people. I found out that they didn't do any of the things that the financial gurus tell us to do. They owned lots of gold, silver, rare coins and antiques. They also owned businesses and real estate. They could care less about retirement accounts because they were only concerned about passive income. They owned interest in tax liens, oil and gas companies and owned whole life insurance policies that pay dividends on your highest historical balance even when you take a loan out from the policy. The conclusion was simple; these wealthy people know about things that I had never heard of. They also know more about tax advantaged investments than most accountants. My mind was blown.
So I end with the question that I started with. Who do you get your money advice from? Is it from traditional Tom who is a licensed broker and a CFP or is it from rich Rick who owns rental properties, businesses and doesn't seem to really ever work? It's so obvious when you think about it that the best money advice would come from someone who is already wealthy! So that's my answer to all of you out in the blogosphere. Find a rich person that you know, take them to lunch and ask them how they invest their money. If you don't know anyone who fits the bill just find someone who is wealthier than you to question. I guarantee that their answers will astound you, and don't worry because they love to talk about money.
Jamie has an MBA from Rutgers University and a Professional
Certificate in Real Estate Finance, Investment and Development from NYU.
He's traded stocks since he was 13 and bought his first property within
a year of graduating college. He also flipped properties and got out
before the 2008 mortgage meltdown because he was able to see the market
turning before it happened. He's started two companies and also has
experience in investing in antiques, collectibles, gold, silver and
trading futures.
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