I want to talk directly to that person that knows that they need to get started in investing, they’re not sure how to get started investing and they don’t think they’ve got the funds or the, or the means enable to get started investing. I want to tell you all of this is possible for you and I want to give you 4 simple steps to make that happen.
The first step is to hack your lifestyle.
You know, we Americans, we are trained from birth that there are certain things that we have to have in order to be happy. We have to have when we’re out on our own, we have to have our own house. It’s got to be a big house. It’s got to be a beautiful house. We have to have the newest car. We have to go on nice vacations. We have to have the Platinum American Express card. There are all these things that we “have to”.
I want to tell you that all of that is bogus and you don’t have to have all that stuff on day one. You can have it at some point, but you don’t have to have it on day one.
The first step in order to get started, my suggestion is hack your lifestyle to do things a little bit differently than what you’re trained to do in our culture. The easiest way to do that is through what’s called a house hack.
A house hack is essentially converting your primary residence into an income generator.
Now I want you to do some math. What is your total mortgage payment or your rent payment? Your repair cost for your house, your interest, your taxes, your utilities? What are your total costs for your housing divided into your income? Most Americans pay between 20 and 40% or even more of their take home pay on their primary residence on their housing expenses.
No wonder we feel like that we’re just treading water if we’re paying 50% of our income just for our housing. It doesn’t have to be that way. The very first house that I bought was a duplex. I lived in one side, rented out the other, and I started off my life to where I didn’t have this massive housing expense. That is my suggestion for you.
Now, the most traditional way to house hack is to buy a duplex A, 3plex or a 4plex for where you live in one unit and you rent out the other units.
But there are actually 19 other ways or 19 total ways that I’ve identified where you can generate revenue from your house. One of those is by renting out a storage shed.
If you don’t have a storage shed, buy one and then rent it out.
Renting out a bare piece of land for somebody to park their RV, Renting out a garage Bay, Renting out a spare bedroom, getting a foreign exchange student that will pay a stipend towards housing expenses.
I’ve created what’s called the House Hack Stack, where you’re able to house hack multiple different ways. Lots of different ways to generate revenue to cover your housing expense.
If your housing expense today is 40% of your income, you just simply take that 40% and you invest it and that’s all you’ve got to do for your investing category period.
My formula for investing is 50% of your income to spend, 40% to invest and 10% to give it away to make the world a better place.
If you’re able to house hack and cover 40% of your of your expenses through that house hack, you take that money you saved that you’re no longer going to be paying towards your mortgage and utilities, etcetera.
Step number two is to take that investing portion of your money and put it into a stock portfolio.
A lot of people might be intimidated, especially those who haven’t gotten started investing yet in trading in stocks.
People on Wall Street create these terms in this vocabulary, and they make things out to be more complicated than they are. I want to encourage you by saying what you do for a living today is most likely more complicated and more difficult than trading stocks.
You take your 40% of your income, you begin to invest it, you dump it into a stock portfolio. It’s important for you to put it in a stock portfolio, in my opinion, so that you can begin to learn to see how stocks react to the news of the day, to economic cycles, and to just the everyday gyrations of the market. Because as you watch those things happen, you’re beginning to build investing muscles that are going to serve you in the next step.
Step number 3 as you’re just getting started, is to begin to invest in income producing assets, real estate.
I write in my book the the, the Hacker Method, The Unexpected Investors Guide to Building Wealth, that there are five different ways that that investing in real estate builds your wealth. Precious metals or commodities or stocks or bonds or mutual funds, none of those have all five of those rocket boosters that fuel our net worth development.
Once you’ve got enough money in your investing account, now you need to begin to invest in income producing real estate.
This is where things start to take off.
I like to make an analogy of investing in real estate to forming diamonds. You know, they say, the scientists say, and I don’t know if this is really true or not, but I’ve heard that in that diamonds are formed over time and pressure. Wealth is formed overtime and pressure. It takes time holding assets in order for your wealth to compound, right? If you’ve never seen the effect of compound and you know, do a Google search and watch a chart where it’s got this hockey stick effect that over time that the returns that you’ve made begin to make returns on themselves and you have this exponential growth in your wealth. It just simply takes time.
Think about it this way, if you’re taking 40% of your income and you’re putting it into an investment vehicle, you’re totally flipping the tables on consumerism and becoming an investor like a powerful investor, OK? So instead of that money being spent and gone forever, that money is preserved and growing forever.
It’s the complete 180° flip. So once you put that money in there, that pressure is that you your discipline of putting that money into your investing account. Now you do the math. I don’t know what your salary is now, but you do the math long and figure out what your compounding is. If you’re investing 40% of your income, over how many years is it going to take for you to become a multi millionaire? I have calculators on my website that are free to use my future net worth. So if you go to theunexpectedinvestor.com/calculators, you can download that calculator for free and do the math yourself to see howit’s going to take you to become a multi millionaire.
Step number 4 is the fun step, it’s the reward step, it’s the retire step.
It’s the step where you say, OK, my investments have now grown to the point. To where not only are my living expenses covered by my investments, but I’m able to continue to grow my net worth even without a paid salary. That’s when you can take this job and shove it. Or you can decide to work when and where you want to work on your terms. You can work on your projects when you want to work.
You begin to make the world a better place because you’ve got more time to invest in those relationships around you that matter the most. You can begin to become a serious philanthropist where you’re looking for ways to give your money away.
If any of this sounds interesting to you, I want to encourage you to reach out to me. Click the connect button in the corner.
