Throughout this site, I’ve written a great deal about how to achieve financial freedom.
The basic idea is to use your money to buy time.
Time is far more valuable than money. Trade something less valuable (money) to buy something more valuable (time). Use your money to buy income producing assets and use the income from the assets to eliminate your need for a paycheck.
This plan for financial freedom requires us to focus our investment dollars on the income producing assets offering the highest return on our investment in terms of income. We can’t invest in assets offering low returns on investment and achieve our goal, unless we have a lot of money to invest. (NOTE: Highest return = most investment income)
Well, we should apply the exact same thinking to how we invest our time. What return am I getting from this time investment? How many times am I getting paid for this time investment? Is my income from this time investment limited or unlimited? How does my future improve from this time investment?
Thinking this way will eventually bring you to the following conclusion:
The highest return on your time investment
will come from creating your own income producing assets.
Income producing assets can be… a business, a website engineered to make money, sales letters, marketing campaigns, webinars (sales presentation), podcasts (sales letters), books/reports (sales letters), intellectual property you sell or license, etc.
These income producing assets can then be leveraged in unlimited ways to create additional future income. Income producing assets give us the opportunity to get paid multiple times for our work. The return on investment is significantly higher than other uses of our time.
Most people don’t think this way. They don’t think about getting the highest return on their time investment. And because they don’t think this way, they typically end up working to create an income producing asset for someone else. Think about it…
If you have a job, you go to work every day to build an asset for someone else. (This should piss you off. It certainly pissed me off when I realized what I was actually doing.)
Someone else gets all of the benefits of the asset being created. They can leverage the asset to collect more income. They can use the asset to buy their time freedom. They can sell the asset. They can pass the asset on to their kids. They can use income from the asset to buy more income producing assets. They can do all of these things because they built an asset.
When you go to work today, what income producing asset are you building/improving for yourself?
– How many times will you get paid from the asset?
– Will the asset provide income over the long-term?
– Can the asset be leveraged with other assets you own?
– Can the asset you’re creating be sold?
– Is the asset you’re creating easy to maintain or hard to maintain?
– Does the asset you’re creating require significant overhead?
– Does the asset you’re creating require employees?
– Is the asset you’re creating dependent upon any ONE thing? (Amazon, YouTube, etc.)
– Is the income from the asset you’re creating limited or unlimited?
Since we were young, we’ve all been taught a few incorrect ideas about money:
1. The best thing we can do with our time is to get a good job.
We then get to work 40 plus hours a week building an income producing asset for someone else. After decades of work, we might get a nice watch at our retirement party. We will own nothing after trading away hundreds of thousands of our lives. We will have no asset to give to our children. And sadly, our children will be stuck in the exact same situation. Isn’t this a horrifying deal? Yet, everyone does it. When you build assets, you get paid twice. Once from the income from the asset you created and a second time when you sell the asset.
2. We should save a 15% of our paychecks so we can retire when we’re in our 60s.
We won’t be able to retire before our 60s because we used our time to build an asset for someone else. The income from our job is severely limited and this is why we’ll have to save for decades. We simply won’t be able to afford to retire. We’ve got no assets. We built assets for someone else instead.
3. When we invest, we should invest for long-term appreciation.
We have to focus on long-term appreciation with our investments, because we won’t be able to retire for 40 years. Who are we making rich with our investments? Mutual fund companies? 401k companies? Wouldn’t it be better to invest into income producing assets instead? We can use the income from the assets we acquire to work less.
4. It’s better work in sales because your income is unlimited.
Working is sales is a far better option than working at a job. This is definitely true because you can make a lot more money than you can from a salary. However, the problem still remains the same. You’re not building any assets. You’re still trading your time for money. You still won’t have anything to show from all of your hours of work, unless you reinvest your higher income into income producing assets.
Here’s a better plan:
Use your time to build your own income producing assets.
Use the income from the assets you create to acquire more income producing assets.