Let’s talk about the single best way to build personal wealth.
A lot of people don’t know this but right out of my undergraduate degree, I ended up be being a stockbroker for a big bank. When you start at a big bank as a stockbroker, you hit the pavement and try to convince people to give you all of their money. Instead, what I did was education around asset allocation and long-term investing in the equities and bond markets and a bit in options.
Maxing out the IRA, maxing out the 401k, building out a brokerage account with a well allocated portfolio is a very smart thing to do.
Something like 4% of stock pickers/financial planners hedge funds that end up beating the market. Keeping in mind that 96% don’t beat the general index, the few who do usually only perform for one year.
As a result of this lack of sustained performance, there’s very little success. It’s akin to putting a bunch of money into a high fee mutual fund. That’s a good way to build wealth REALLY SLOWLY over the long term.
We all want to build a nest egg over time.
As you start to learn more about personal wealth and investing, you start to understand that instead of just earning money at your job and putting a bunch of money into your retirement account or brokerage account, you want to get higher returns. This is likely when you start to explore investing in other things, such as angel investing or real estate investing or in projects with business colleagues.
If you start to move that direction, it’s highly likely that you might be able to make 10% annual returns on your money, 15% maybe even 20% annual returns on your money.
The average cap rate is 6- 8% on a real estate investment and in stocks and bonds. These private investments can offer up to a 15% return. It’s a little riskier but you’re increasing your returns.
The truth is that when it comes to really accelerating wealth quickly, building autonomy in your life, and having the most impact you possibly can, buying an existing company is the foundation of those things.
When you buy an existing company, it’s possible to start making a minimum 25% return right off the bat. It’d be more common to make a 30 to 35% return just on the invested dollars down the road.
This isn’t a get rich quick strategy rather a get rich a hell of a lot quicker than some of these other ways strategy. If what you want to build is wealth so that you can live your dreams, then you should really consider buying existing companies.
Consider looking for active investments, as opposed to, the sexiness of the passive investments. Buying and building existing companies is the single fastest way for most people on this planet to build wealth, which in turn builds autonomy in your life, safety for your family and the impact that you can have.
If you plan on buying a business in the next 12 months, please consider applying to the Acquisition Lab, our do-it-with-you buy side advisory service. Gain access to world-class education, support from our team of experienced advisors, a suite of tools, and a vetted community to help you succeed in that first acquisition or in implementing a grow-through-acquisition strategy.
