At Wealth Factory, people are always asking us what to invest in.
And we get it. Especially now. Things are moving so fast, it can be hard to know what’s coming next.
After all, the economy is skating on razor-thin ice. Everyone feels it.
It’s causing unrest. And it’s been brewing for months, even years.
Think of what’s happened just this year…
An ugly impeachment trial. A deadly pandemic. Peaceful protests. Violent riots.
A historic stock market crash in March. Followed by a historic stock market rebound in April and May.
Unprecedented government spending. Business bailouts. Personal stimulus checks.
The Fed printing new money like crazy.
Once-popular businesses like Hertz, JCPenney, Gold’s Gym (and 421 others) bankrupt within 5 months of the pandemic.
Oh, and let’s not forget about the nasty November election slugfest currently in the works…
“America is spiraling out of control”
So it’s really no wonder that 80% of respondents to a recent Wall Street Journal/NBC poll said they felt: “America is spiraling out of control.”
All this uncertainty has also forced people to think (and worry) about their investments.
Should I move to gold? Crypto? Won’t cash be trash with all the government stimulus devaluing the dollar?
They hear about other people raking in huge profits.
And then there are gurus fanning the flames with predictions of gold hitting $10k per ounce, or the stock market hitting 40,000, or even speculations of bitcoin reaching $1 million.
They try to convince you that these kinds of speculative “investments” are the secret sauce to creating financial freedom.
And they leave most people feeling like they are missing out on massive opportunities to finally secure their financial future.
There’s only one problem.
While a select few people WILL get rich buying stocks or cryptocurrencies or precious metals…
The Vast Majority Will Lose Money in these So-Called “Investments”
Just like in Vegas. Or in the lottery.
Because speculating in such things is more akin to gambling than investing.
And that’s why it’s so important to have solid, foundational, guiding principles to anchor your investing strategy.
You see, the answer to whether gold, cryptocurrency, or real estate is a smart investment for you is always: it depends.
It depends on your competency and knowledge and skill.
That’s why at Wealth Factory, we never tell people what to invest in.
Instead, we show them how to invest wisely. And that means investing inside their strengths and in line with their Investor DNA.
To see what we mean, let’s start with an example:
Should YOU Invest in Precious Metals (Like Gold)?
One of the key principles we use to help guide our members to minimize risk and create Economic Independence in as little as 3-7 years is:
Key Investing Principle #1:
Focus on cash flow instead of accumulation
If you buy a couple bars of gold and put them in your safe in case the “end of times” is near, do those bars create any cash flow for you?
Of course not. But that doesn’t mean they don’t have a purpose.
Precious metals are more of a “chaos hedge” than an “investment.” They safeguard against inflation, and the argument could be made that if the dollar collapses completely, gold or silver could maintain your wealth.
Our Founder and Chief Wealth Architect, Garrett Gunderson, has joked for years that if it really were the end of times, then food and toilet paper would likely be more valuable than that brick of gold you’re storing.
The food and TP shortages in the early pandemic certainly verified that point.
Now we always recommend storing 6 months’ worth of expenses in a safe place as part of your foundational strategy for safety and security.
And it’s perfectly feasible to have 1 or 2 months’ worth of those expenses stored in precious metals, especially in a physical form that can be traded.
So it’s not wrong to have precious metals. We just don’t view them as an “investment” because our investing principle says that investments should produce cash flow for us. That’s how you can build Economic Independence so much faster than by trying to accumulate wealth.
Now, the exception to all this is if you actually have a business that deals in gold or precious metals, like a coin dealership or bullion supplier. In that case, precious metals could be a part of your Investor DNA (keep reading to find out how to uncover yours) and could be a great way to “invest” in precious metals.
The same principle applies to cryptocurrency. If you own a crypto exchange or focus 100% on understanding the ins and outs of cryptocurrency (and can therefore profit without blind speculation) that could be considered an investment and part of your Investor DNA.
But if you’re just buying gold or bitcoin at random or based on some “tip” you heard, you’re speculating, not investing.
Is Your Current Investing Growth Strategy Like Hiring a “Gambling Expert”?
If you want to get your money working for you (so you can achieve Economic Independence faster), then your growth strategy should also be founded on:
Key Investing Principle #2:
Focus on your “Investor DNA”
So instead of diversifying into things you don’t know, understand, or have experience in, you only focus on what’s in your own personal “wheelhouse.”
Now here’s an important byproduct of that: focusing on your Investor DNA is the exact opposite of diversifying.
Yes, financial advisors love to tell you to “diversify.” And on the surface, it seems to make sense. If one of your assets takes a hit, at least you’re not ruined, right?
In reality, splitting up your capital into 7 different assets you know nothing about and have no control over is incredibly risky.
That may seem hard to believe since everyone talks about diversification as some kind of magic risk-reducing formula. So let’s reframe this popular “strategy.”
Why Diversification Is So Risky…
Imagine going to a casino with $10,000 and saying you’re going to spend $2,000 each on poker, roulette, slots, blackjack, and craps — because you only know a little bit (or nothing) about each game.
See how that so-called “strategy” doesn’t really reduce risk?
Why Investment “Advisors” Can Also Increase Your Risk…
Staying with our casino example … imagine you hire a friend who claims to be a “gambling expert” to play for you. He says he’ll use your $10k to do the gambling, and you’ll split the proceeds.
Now you have absolutely zero control over what happens. Only trust. At least when you were playing yourself you had some decision-making power.
The problems are endless. Your “friend” could get emotional after a loss and double down when they shouldn’t. They could have one too many cocktails and make a poor decision. Or maybe they overstated their “expertise” and really don’t know as much about these games as they told you.
Now it’s true that handing your investment portfolio over to a professional financial advisor isn’t exactly the same as hiring a friend to gamble for you.
But when they’re playing with your money against the house and other sharks, you certainly want them to know more than just the basics, right?
Or you want them to at least have some advantage over what you could do on your own.
Or at the very least, you want them to be better than a cat, right?
Say what?
Check it out. In a 2016 Last Week Tonight episode, John Oliver hilariously shows how a cat picks stocks better than most financial advisors.
The Truth about Investing Risk…
Now, continuing with our example of taking $10k into a casino.
What if — instead of being a novice or hiring a friend — you’re a world-class poker player?
You walk into the casino with a strategy, experience, discipline, and confidence that you can overcome any obstacles or losses along the way.
You walk past all the other games you don’t understand.
You understand one thing well. The game you’re playing. You have a level of control over the outcome. And you have a reasonable chance of doing well.
That’s Investor DNA.
Your Investor DNA is your unique combination of strengths, values, and passions combined for the highest context of life or best intention of living.
Focusing on investments that align with your Investor DNA is less risky because you become an expert on them. You know all the ins and outs.
You know when it’s wise to double down, and when it’s time to bail.
And that is ultimately one of the most powerful lessons you can learn about investing:
Key Investing Principle #3:
Risk is in the investor… not the investment itself
So How Do You Become a Better Investor?
Focus on cash flow, and focus on your Investor DNA.
Because when you don’t know your Investor DNA, it becomes impossible to differentiate between opportunities and distractions.
When you are aligned with your Investor DNA, you will have the purpose and drive to do the maximum to achieve your objectives.
When you’re not aligned with your Investor DNA (or are just in something for the money) you’ll likely do the minimum you feel you can get away with at every turn.
Ultimately, this lack of commitment and activity means results will suffer.
Living aligned with your Investor DNA creates the most favorable condition for success because it frees you to concentrate only on the most important and rewarding activities for you.
Investor DNA helps you to more concretely understand and envision the “big picture” of your life and what you want in order to enjoy it.
Want to Better Understand Your Investor DNA?
Garrett Gunderson, Founder and Chief Wealth Architect holds monthly, members-only training for his exclusive Wealth Builders Club.
Several times a year he goes deep on discovering your Investor DNA session.
And even if this month’s session isn’t on investing, you can always ask Garrett questions in real-time during the mastermind.
If that sounds like something that would help you find financial clarity in your life, join Wealth Builders Club right now.
It’s a monthly membership that gives you all kinds of other exclusive benefits, yet there’s no long-term obligation and you can cancel anytime.
So yes, you could just join for one month to get the current month’s training on. a specific topic like Investor DNA.
We have a feeling that once you see the value of becoming a Wealth Builders Club member, you’ll be like most members and decide to stick around for a while.
Either. way, the choice is yours and there’s absolutely no risk in at least checking it out.
Investor DNA is always one of the most popular topics Garrett presents, and in times like this, it’s an absolutely critical skill you’ll need to get through these crazy times.
And if you can’t make it to the first live session, don’t let that stop you from joining today. Wealth Builders Club members get a replay of the mastermind as well as a full executive summary with action plans to go with each session, so you can view the session on-demand right from your member portal any time you want.
Looking forward to seeing you inside the Club!
Build the life you love,
The Builders at Wealth Factory
