What’s your investment plan?

When I think about this I cringe because I know I’m wholly unprepared. I need to make major changes to make this happen. Changes in my income, changes in what I invest in, and changes in how I invest.

Right now, I work a 9-5 and have automatic deductions go to a 401k at 7% of my annual salary and 4% matched by my employer. So 11% total. According to Fidelity I need to be saving 20% to have the same type of lifestyle that I currently have if i were to retire at 65.

Well, I don’t want to retire at 65. I don’t even really want to retire. I want to have enough income coming in so I can live a comfortable lifestyle without (unnecessary) fear that it will all just go away. But more importantly, I want to build businesses, build products, contribute my time and energy to projects and people that matter to me. Having a 9-5 is holding me back from that dream.

Jobs can just go away. There is no loyalty in corporations anymore. They are always looking at the bottom line, and if you aren’t perceived as a contributor, then you are gone. I can always get another job, but I don’t want to have my whole income rely on a single point of failure.

401k’s are a good retirement investment, but those don’t provide recurring income necessary to live a quality life before 65. I still don’t want to wait to 65 to have some modicum retirement income based on a measly salary with a merit increase that is 3% short of inflation year over year.

Retire at 65? With a male age expectancy of 85-ish, that gives me only 20 years, and with mediocre health. No thanks!

So for retirement, maybe I diversify and get a Roth IRA. Pretax retirement investing. This is better because taxes are only going to go up and I’ll be investing with tax free dollars. However I trust that the government will find a way to get their fingers on that money as well once they realize they are not making enough through the 401k taxes at retirement age for my generation.

So what then? The prevailing advice to my generation (from generations past) is to get better skills and get a better job with better pay. Then save that money, and invest it.

But I have a family to take care of, and soon parents to take care of, and a mortgage to take care of, and then the costs of daily life, then if i’m lucky, i’ll have a little bit extra to take a much needed break from working my fool ass off. No, I need a better way to create income than just a better paying job.

There are three things that I know of that will do that. I’m sure there are more, I just don’t know what they are at this time.

1. Thing #1. Build your own business. Preferably a product based business.
2. Thing #2. Invest in multi-family real estate rentals.
3. Thing #3. Invest in Dividend Producing Stocks.

Actually there are many more ways to invest here, but I’ve listed these three as they are what I think are my best option at this point for long term wealth building.

The Plan.

Step 1.0: The first step of the plan is to build a cash flow business. Selling Products is what I’ve chosen to do as they look to be the most lucrative with the least hassle based on my market research. I have done this with a small amount of success years ago, but I have not given it a focused effort before. I am using this blog as a training ground to test these ideas.

Step 1.1: Once income is coming in through products I need to re-invest that money into the business until it is producing 1m a year. I need to do this for tax reasons, as well as cash flow reasons. I want to be earning off of a 1million dollar a year business, not 5 or 6, 80k a year businesses. I don’t know how long this will take, but the internet tells me it can be done in one year.

Step 2: Take the surplus money from step 1 and invest it in a multi-family rental property. I need to research doing business as a rental business with an LLC. Taxing issues, how to re-invest business money and staying above board on my taxes here. Capital gains. Anything else?

I like rental properties because the property value goes up so i’m earning a percentage of the market, and rent is being paid. Rent goes up, property values go up and I’m getting passive income from the rent, and investment income from the property value. Even if the property dips in value, the rental market will continue in highly populated areas. The trick is to find those areas.

I currently own a 2 family home and have rental income coming in. This is nice because it is a separate income stream than my job. I can lose my job without losing my house. That’s nice. However being a landlord is not without its challenges. My plan is to eventually have a property management company take over this part. But this just means that I need to go back to step 1 and build a cash flow business to fund these investments and services.

Go here to see the economics of a house rental business. What do I need to know about taxes for a rental business? How do I purchase a house if I don’t have any money?

Now, Dividend producing stocks.

Step 3. The internet tells me that if I want to create recurring passive income and watch my investments grow, the next best way to do this is with Dividend Producing Stocks.

I don’t know much about how to invest in dividend producing stocks… Or what stocks to invest in. I’m still figuring out step 1. But, I will find out and have a list to share.

So, to recap. If you want to retire before 65 do these things…

1. Build a cash flow business and reinvest that money into the business until you are earning 1million per year in revenue. Then you can pay yourself for step 2.
2. Invest that money into multifamily rental properties.
3. Invest additional money into dividend producing stocks.

It’s important to mention; you need to know what your number is. How much do you need to 1. survive, 2. be comfortable, and 3. have abundance. I just skipped over survive and comfort and went straight to abundance/growth because I did a comfort analysis (how much it would take to be comfortable) and know that if I’m making 1million a year, I will meet both my comfort needs and my growth needs.

It’s also important to have a very strong why. Why are you doing this? Listening to Jim Rohn, Tony Robbins, Dale Carnegie, and especially Napoleon Hill, have given me clarity in my direction that fuels my desire to achieve this goal.

Never underestimate the mental game.