The Path Behind Will Not Get You Where You Want To Go
Have you arrived at your desired destination, or are you at least close enough to see the finish line? If not, what has kept you off the path of where you truly want to be?
Like many Americans, do the following concerns weigh on your mind?
- You’re still grinding away at your job, tired of the overlords at work tracking your every move.
- You recently tracked your 401(k) balance and your progress towards retirement, and you’re not even close to having enough for retirement.
- You don’t spend nearly enough time with your children or grandchildren.
- 2-3 weeks of vacation a year is just not enough to recharge your mental, emotional and spiritual batteries.
- There are so many charitable causes you’d like to contribute to and ways you’d like to serve in the community, but you don’t have the resources or time to do so.
If you want to change your path, I’ll tell you what’s NOT going to work: Keep doing what you’ve always done.
“Insanity is doing the same thing over and over again and expecting different results.” -Albert Einstein.
I get it. You have just been going with the flow – doing what everyone around you has done – namely: 1) get a degree, 2) get a job and 3) retire off 401(k) balances and social security.
The problem with going along with the crowd is, it just doesn’t cut it. If you’re like the average American, here are some sad economic statistics:
- 46% of Americans plan to work past age 65, and more than half of them say they’ll work longer mainly because they have to.
- Nearly 1 in 5 (17%) baby boomers have less than $5,000 in retirement savings, and 20% have less than $5,000 in personal savings.
- Nearly half (46%) of Americans would struggle to cover a $400 emergency, according to a 2016 Federal Reserve report.
- The average retail investor loses money in the stock market on an annual basis when factoring in inflation.
So what sets the wealthy – who live the lives you want to live – apart from everyone else?
Before answering that question, let’s look at the money habits of everyone else before looking at the wealthy:
Middle-Class Money Habits –
- Most middle-class Americans carry credit card debt, which is costly because the average credit card interest rate is now over 16%.
- The middle class allocates their investment portfolios heavily to Wall Street products like stocks, bonds, and mutual funds.
- The middle-class investment strategy is short-term, speculative, and centered on timing.
- Spend too much on depreciating assets like cars, toys, and clothes.
Wealthy Money Habits –
- Little to no consumer debt. If the wealthy use credit cards, they usually earn spending points, and they typically pay off the balance before accruing interest.
- Minimize expenses to preserve capital for investing.
- Allocate most of their investment portfolios to private investments like commercial real estate (CRE) and private equity instead of public equities.
- The wealthy think long-term, avoid speculation and seek out cash flow, appreciation, and tax benefits when investing.
- Spend money on appreciating assets like CRE and PE instead of depreciating ones.
Up to this point in your life, you’ve been traveling the well-worn path that everyone else around you has been traveling. But, as you and millions of Americans are discovering or have discovered, the path behind – the path you have been taking – is not working. It’s time to change your path.
“If you want to know the road ahead, ask the person who’s been there.” –Malcolm Glazer (Late Billionaire and Owner of Tampa Bay Buccaneers).
If you want to get to where the wealthy are, study their money habits and if you know such a person, ask them how they did it. Pick their brains.
Most would be happy to share with you their path to success. Don’t you think it would be worth it?
Michael Foley, president and CEO of Humabilt Capital, oversees the entitlement process, funding, and operations for Humabuilt Capital. Mr. Foley has been a full-time real estate investor since 1995 during which time he has developed hundreds of single-family homes, townhomes, condominiums, and apartments. Mr. Foley started his investment ventures in Long Beach, California, and has expanded to Apex and Durham North Carolina. Mr. Foley is a graduate of the University of California at San Diego.