The Map To Economic Independence Part 3/4: “Wealth Architecture Blueprint”

Lesson 3: Wealth Architecture Blueprint

Each of these are in depth lessons – with specific teaching points and action steps so you can start putting them into practice in your life now, and shave years – or even decades – off your journey to Economic Independence.

Key Teaching Points for Lesson 3:

Key #1: Don’t Diversify. FOCUS.

Key #2: Master the 5 P’s to Build Your Wealth Architecture Blueprint

Highlights:

• Diversification is actually di-WORSE-ification. Billionaires don’t diversify, they focus to get extraordinarily good at one thing… and you can too
• Whether something is a good investment depends more on you than the investment
• Strong professionals and an integrated team help you build, preserve, and protect wealth
• Never make decisions from scarcity. A wise perspective drives wise financial decisions
• Clarity of purpose will guide you to build and adapt your plan as needed

Action Steps are listed at the bottom of this lesson.

Key #1: Don’t Diversify. FOCUS.

“Keep all your eggs in one basket, but watch that basket closely.”
–Warren Buffett

You’ve heard the concept of diversification before, right? Or rather, you’ve been “sold” it by financial marketers and mutual fund companies because it’s how they line their own pockets with fees and commissions (regardless of whether your money grows or shrinks).

Here at Wealth Factory, we agree with Warren Buffett’s assessment and call it di-WORSE-ification.

Why is diversification usually worse? Because you take money away from places that you know and understand, that align with your skills, experience, and interests (aka your “Investor DNA”)…

… And you move it into various other financial products (most commonly mutual funds and government retirement plans).

Typical financial planners call this “smart” — and people buy into it because they feel some level of guilt that if they don’t start saving enough money, and if they don’t start saving early enough, or if they don’t automate their investing with regular deposits into a retirement account — that they’re going to miss out.

But the reality is. This type of diversification actually makes you miss out on things that you’re more in control of. Things that can grow your wealth much faster than waiting a lifetime to access and enjoy.

So if focusing is the right approach, the first question we want to answer is…

What’s a “Good” Investment?

A lot of people write in and ask us what a good investment is…

… Or ask “should I invest in XYZ?”

First of all, if you have to ask that question, you’re most likely not ready to invest in it just yet.

Because the real answer comes by asking a more important question… “is XYZ a good investment for whom?”

It could be a fantastic investment for one person, but a horrible investment for you. It depends on your Investor DNA. Your skills, experience, and passions that make you uniquely qualified to invest in a certain thing.

When you know your Investor DNA and put all your eggs in baskets that align with it, you’re going to save a LOT of time and gain even more peace of mind. Not to mention increasing your chances of making money off the investment.

So one of the key components to reaching Economic Independence faster is to not waste time on anything that isn’t aligned with your investor DNA.

You’re not going to listen to pitches and investments that aren’t right for you.

You’re going to focus (instead of diversify) on a narrow group of things that has the best chance to produce WAY better returns for you.

All You Have to Do is Look at Billionaires

Andrew Carnegie said the same thing as Warren Buffett… he put all of his eggs in one basket and watched it like a hawk.

Focus over diversification.

Now some people see some billionaires investing in all kinds of diverse things and think that’s how you do it.

Remember, billionaires didn’t get where they are through diversification. They got there because they were extraordinarily good at one thing.

Then maybe when that really paid off and was really powerful, then they chose to start investing in other things. Because…

Risk is in the investor, not the investment.

If you’re considering an investment you don’t understand well, then you’re taking on too much risk.

Here’s an analogy to really drive this home, because this single concept is where so many people lose their way.

This is critical, because if you don’t get this (and really “get it” in your heart) then everything else in these lessons won’t save you from stagnant financial growth.

Be The Amazon River, Not A Bunch of Small Streams

Imagine you’re standing next to the Amazon river.

Everywhere you look, life is flourishing. There’s so much life around it, the beauty is hard to comprehend.

And it’s so powerful that there’s freshwater that’s pushed into the ocean for miles.

It’s hard to imagine there ever being a lack of water when you look at this force of nature.

Yet, nearby, other smaller streams dry up when the heat of summer comes along because they weren’t powerful enough to sustain the hard times.

Would you rather have a dozen small streams that all dry up as soon as hot weather hits?

Or would you rather have the Amazon river? An unstoppable force that sustains everything around it.

The small streams are what happen when you di-WORSE-ify.

Purpose allows us to be laser-focused and say, “Okay, these might be good opportunities, but they’re not the right opportunities for me because I’m only gonna focus on a few things.”

So you say no to a lot of things. Warren Buffett also said the difference between successful people and highly successful people is the number of times they say “no.”

Highly successful people say no a lot more than successful people, because they’re purpose-driven. They’re saying “these are the only things I’m going to focus on.”

So, how do we protect our downside with investments? Put all your eggs in one basket and watch it like a hawk. When you have too many baskets, it’s hard to keep track.

Key #2: Master the 5 P’s To Build Your Wealth Architecture Blueprint

Reaching Economic Independence quickly and sustaining it through generations isn’t just about having the right information, but also having the right team… which is a big part of our next key as we move into the 5 P’s of the Wealth Architecture Blueprint.

Our founder, Garrett Gunderson, wrote a book called What Would Billionaires Do? And one of the things that a specific billionaire referenced in the book invented is what came to be known as the Rockefeller-style family office.

See, in their day, the Rockefellers and Vanderbilts were the 2 wealthiest American families.

At one point, the Vanderbilts had more money than the U.S treasury, which is crazy, and impressive.

Unfortunately, 54 years after Cornelius Vanderbilt died (Cornelius originally built the family fortune), the first Vanderbilt family member died completely broke.

You may have heard of Anderson Cooper, who works for CNN. Well, he’s an heir of the Vanderbilts, but he didn’t get any money because of the family’s bad decision-making. And because they didn’t have a solid financial team.

Instead, they started to just buy things. They owned 10 mansions at one time, some of which have since been torn down and one is a museum on Rhode Island.

What they spent their money on didn’t have anything to do with their Investor DNA. It had nothing to do with how they made their money. The values, the contribution and the philosophy that built their massive wealth hadn’t been translated to the next generation so that it could be sustained and grown.

This is an excellent example of why…

P #1: PROFESSIONALS Help You Build Wealth, and Keep it Too

How do you pass on wealth to your kids so they don’t become trust fund babies and don’t feel entitled… and so that wealth is a blessing for them instead of a curse?

Well, the Rockefellers figured that out in a pretty big way, because they’re now in their sixth generation of passing money on. They donated $50 million to charity last year and their net worth is still growing.

Part of that was relationship capital. They built a financial team that worked only for their family. They got together and said we need the right professionals because no one is an expert at everything. That includes:

• Attorneys
• Accountants
• Insurance professionals
• Asset protection specialists
• Fiduciaries and investment specialists
• Cash flow specialists

They all work on the Rockefeller estate to make sure it’s preserved, protected and perpetuated.

If you’re a business owner, then you know how important it is to hire good people. And you know you don’t just look up good employees in the yellow pages. You seek them out. Interview them. Ask questions, and evaluate performance.

But if you look at your financial life, have you taken the same amount of care and concern to build a strong financial team?

Have you thought about whether or not they’re all A-players? If they’re out looking for you and looking after you to make sure that you’re protecting your wealth and that everything’s integrated and coordinated?

Getting the right professionals on your team – and paying them well (because you get what you pay for) – is an investment that will save you an immeasurable amount of time and money, as well as give you true peace of mind that your wealth, and legacy, will sustain the test of time.

P #2: PERSPECTIVE Drives Good Decisions

We’ve talked a lot in these lessons on how to think about investing. That’s because you are in the driver’s seat of your own finances and life…

And great driving comes from making great decisions.

If you want to create more abundance in your life, then it’s critical that you make decisions from a place of abundance. If you’re not in abundance, don’t make important financial choices.

During that time, you have to have someone else who is in abundance help guide you through it…

… So you don’t make a misstep or have a mishap as a result of choosing from a place of scarcity… because scarcity tends towards insanity. It tends towards making decisions that are short-sighted and don’t lead to lasting and sustainable wealth.

Here’s an example.

Let’s say someone comes to you with an exciting opportunity, but you have to invest now because the deadline’s tomorrow.

Garrett Gunderson, our founder (who you’ll meet in person on the upcoming live webinar that ties all of these lessons together) says that he would immediately say NO, even if he’s going to miss out on something good.

Why? Because in this scenario there’s no chance for the right amount of assessment.

He shares a story where a friend called about a home she need to sell fast because it was going into foreclosure.

The foreclosure was going to happen two days from the time she called.

She owed $69,000 on the house, and Zillow said it was worth around $225,000.

It was a tempting offer, but Garrett couldn’t disrupt his life at that time to fly out to see it.

He called a friend in the real estate game to see if he could help, but his friend said he didn’t invest in that area and didn’t have the time for due diligence.

So Garrett passed on the deal.

This is an important lesson because as soon as you start feeling that greed kick in, like “I’ve got to get involved in this,” then it triggers a fear of missing out (FOMO) feeling. Then you’re going to make emotional decisions, and the higher the emotion, the lower the financial IQ.

So this “P” — Perspective — is essential and is making sure you’re in a more abundant mindset where you’re thinking clearly. If you had an unlimited checkbook, if you had endless possibilities and money wasn’t an issue or concern, what would you do?

Where would you invest? It’s that perspective that we begin with.

P #3: PURPOSE Is Your Guiding Light

This goes back to focusing, not diversifying.

When you have a vision, and when you have a purpose, then things get real simple for you.

It becomes your guiding light.

An opportunity to buy a business at a deep discount comes up.

Does it align with your purpose? Are you in a mental place of abundance?

Then take a closer look. Maybe, if it aligns with your DNA and will help you fulfill your purpose, you buy it.

But if it doesn’t move your purpose in the world forward … no matter how good the deal seems, it’s a quick “no thanks,” or “I’ll pass.”

Remember, the most successful people are better at saying “no,” and nailing down your purpose will help you with this fast.

P #4: Create a PLAN To Achieve Your Goals

This is the theme of our entire 4-part series… mapping your path to Economic Independence.

Have you gone through each lesson and taken notes, answered the questions, and done the action steps?

Have you started to put together your plan?

Now is the time.

Remember, you don’t need to do it all at once. Big things are built one brick at a time… but they’re also laid intentionally based on a master plan. They aren’t thrown down randomly.

At the same time, as Mike Tyson once said, “everyone has a plan until they get punched in the mouth”…

Which — if you’ve been in business or investing for a while — you know is 100% true.

Make a plan. But be flexible. Adapt to the challenges and opportunities life throws at you and update your plan as needed.

Going back to our map analogy, if there’s a roadblock on your first path, you simply navigate to find another.

P #5: Financial PRODUCTS Give You The Structures & Systems To Succeed

In this series, we’ve talked about insurance, loans, and even things like trusts and documents to include in your will that carry forward your family’s legacy.

We’ve briefly mentioned Cash Flow Banking, which is a favorite tool of our members because it’s a special type of whole life insurance product that allows you to build “cash value” and earn tax-free interest between 4 – 6% that’s fully liquid and accessible.

Loans, credit cards, and lines of credit are important financial products that give you additional liquidity or leverage so you can pounce on opportunities or maybe transfer high interest debt to much lower interest debt that can be paid off faster.

We’ve talked about creating a Wealth Capture Account using a checking, savings, or money market account so you can pay yourself first (up to 18% of each paycheck).

You need to understand and put into place the right financial products so that you can build a system that automatically grows and protects your wealth.

Just like a business has all kinds of systems and products to scale – whether it’s software, a physical location, or standard operating procedures…

Your financial life will only scale with the right financial products for you.

Coming Next: Lesson 4 on “The Single Most Important Part of Mapping Out Your Path to Economic Independence”

Now that we’ve covered the importance of charting your own path to Economic Independence…

The roadmap to real wealth…

And the 5 P’s of your Wealth Architecture Blueprint…

We’ve come a long way together on the journey to Economic Independence.

But we’re not done yet…

There’s something that’s so important… something that will 10x the power of these lessons… that it needs to be taught in a live session.

Which is why Wealth Factory founder Garrett Gunderson himself will be leading this live class.

And we highly suggest you attend live so that you can ask any clarifying questions about how to apply this in your life.

More than anything, we want you to get results – as quickly and easily as possible.

If you haven’t already, save your spot for the live webinar now.

In the meantime, here are some questions to reflect on, as well as action steps to start implementing this lesson in your life.

You don’t have to do them all right now.

Rather, pick the most important questions and action steps for you. Maybe it’s something that inspired you. Or, maybe it’s something you’ve been putting off… that if you dealt with would free up a huge amount of mental space and energy?

Only you know what’s best… and only you can chart your unique path to Economic Independence. But you can bet we’ll be here every step of the way to help guide and support you.

Questions

1. Where am I too diversified (and need to focus more)?
2. What’s an example of a decision I made out of scarcity that worked out poorly?
3. How clear is my plan to achieve Economic Independence? How can I flesh it out further?