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Investing Isn't as Powerful as You Think

Investments | By Wakefield Hare | Fri Oct 15 2021

Making money by not really doing anything sounds awesome. It is the reason why many are attracted to be savvy investors. If there is an opportunity to have my money do the work of making more money, you and I should be smart enough to figure it out, right? 

The truth is, we can, and we should, make money in our investments over time. But, the odds of our investments making enough money to sustain, or increase, our lifestyles before we reach our 60s are extremely low. 

You may know families who made a lot of money investing and believe they are the proof that investing alone can lead to a great lifestyle. But what is not visible is the role consistent contributions played in growing that family’s wealth.

That’s great news for you and me, because it means there isn’t secret investment knowledge that needs to be obtained to reach financial independence. Instead, we simply have to come up with substantial investment contributions. How hard can it be? All we have to do is increase our income or decrease our expenses. That’s all...we...have to...uh...do. I know...I was hoping for an easier way, too.

However, the media, your neighbors, and worst of all, your financial advisor only want to talk about investments. Well tune ‘em out because they are all wrong to put so much focus on what investments you are, or are not using. Do you want financial independence? Then you simply have to follow 2 steps: manage your expenses and increase your income. 

“I wish I would have done that when I was younger, but I’m too late now!” I hear that line often. But an old proverb says this: the best time to plant a tree is 20 years ago...the second best time is today. If you’re still here and believe you have life left to live, then what you do today matters! It is true that the sooner and younger (whatever “young” means to you) you take control of your expenses and increase your income the better. 

If you want to see some results fast, start with a plan for how you spend your money. A little can go a long way when trying to manage your expenses wisely. In fact, if you were to do just one thing for yourself this week, be sure it’s to write down all of your expenses on a notepad or spreadsheet. That exercise alone has been proven to help us make better choices.

The longer term, but even more powerful, step is to set a plan to increase your income. Your time is powerful. Many people are ready and willing to pay you for your time. And the more you increase your skills and experience, the more powerful your time becomes. There’s many ways to get that done. The best is to get as much experience and education as possible. Not all experience and education is equal though...seek some wise counsel as to the best type of education and experience for you. 

If you actively find ways to increase the value of your time, and thereby increase your income, you’re going to have a lot of options to build wealth. Mix that with spending your money wisely, and prepare yourself for a level of financial freedom most only dream about.