Boring Investing, Crazy Wealth
I recently had a revelation: I'm an incredibly boring investor. The things I put my money into aren't flashy or bound to become the talk of a cocktail party. Instead, they're predictably dull. No cutting-edge startup promising revolutionary tech, no penny stocks poised for overnight success, and definitely no hopping on the latest cryptocurrency craze.
So, what exactly do I invest in? Let's take a peek under the hood.
First up, there's dollar-cost averaging, where I consistently funnel $2500 a month into medium-risk managed accounts in the market. Index funds are my bread and butter, and I'm in it for the long haul. I'm not one to sell; I prefer to keep buying, letting my investments compound over time. Even the dividends don't tempt me—I simply reinvest them for more shares.
Then there are hard money loans. I lend a guy $70-100K, which he uses to purchase and renovate houses. In return, I receive a straightforward 15% interest on a 6-month term, secured by the property itself. All I have to do is wire the money—it's essentially being the bank. Super boring, right?
Next, land investing. I've stumbled upon a lucrative deal where a chunk of land is bought and subdivided for a tidy profit. It's akin to the vending machine model: buy low, sell high, rinse, and repeat. Investing in plots ranging from 100 to 10,000 acres yields me a steady 20-25% return in 12-18 months. Boring? Perhaps. Effective? Absolutely.
IBC, or cash value life insurance, is another one of my unexciting yet reliable investments. Forking out $75K annually, I'm building both a safety net and a cash value that grows at a guaranteed 4% each year, with dividends sweetening the deal. It's slow and steady, reminiscent of a turbocharged savings account. The real kicker? I borrow against the cash value to fuel other investments, enjoying the luxury of borrowing at a mere 4%.
He is a perfect example of this:
I will do one of my hard money loans to a house flipper - here is an actual example. I gave my GC $85,000 for 6 months and he pays me 15% simple interest on that. Simple interest is a 15% payment on that dollars not annual interest. SO in 6 months he pays me $12,750 + my $85,000 back.
I will borrow the money from my IBC and it will cost me 2% - because that rate I can borrow that money from is 4% annual interest. So it will cost me $1700 to use that money which gives me an actual profit of $11,050.
ALSO- the money is growing in the IBC at a guaranteed 4% a year PLUS any dividend that is created in that process. I am being my own bank - I am an owner not a customer in this scenario.
Then there's business buying, undoubtedly the most hands-on endeavor in my portfolio. Purchasing a business, installing an operator, and fine-tuning operations and marketing until it starts generating cash flow—it's a labor-intensive process. But the returns? Oh, they're worth it. This segment demands the most time and effort, but the potential rewards are unparalleled.
In essence, my investment philosophy boils down to this: patience is key. As I write this, I have roughly $450-$500K invested, with expectations of an 18% return. Not too shabby, right? But the real magic happens when you let compounding work its wonders. In five years, that initial investment could balloon to over a million dollars.
$531K ($95,580) (how much money said number will make at 18%)
$626,580 ($112,784)
$739,364 ($133,085)
$872,449 ($157,040)
$1,029,489($185,308)
Morgan Housel once said (and I'm paraphrasing) that Warren Buffett made 90% of his wealth after turning 60. It's a testament to the power of compound growth and the virtue of patience. While I indulge in some luxuries, I always operate within my means, paying myself a modest salary each month.
So, where did I learn all this? A little bit from everywhere: years of reading financial literature, surrounding myself with knowledgeable individuals, and devouring insights from experts on platforms like YouTube. The key takeaway? Wealth accumulation is a slow and methodical process, requiring discipline and a long-term outlook.
Sure, there may be new opportunities on the horizon as I age, but the fundamental principles remain the same. Wealth isn't built overnight—it's nurtured over time, with careful attention to detail and a steadfast commitment to the journey. In the end, it's not about chasing material possessions; it's about cherishing experiences, overcoming challenges, and savoring precious moments with loved ones.
I have joined 2 different groups where I have paid money to be in community with people that do deals and know this stuff. If I had to do it all over again I would do that quicker. The key to that is getting all you can out of the group and out of the people. There is only so much you can learn from videos. It’s there, but you learn more from coffee with people. Meet with people and be the one asking questions. You have your skillset, everyone does. GIVE what you can but ask the questions and learn. But the most important thing is DO. Do a deal, get involved, ask the questions. Just like money - information, knowledge, and experience COMPOUNDS. Let it compound and be patient.