Many investors solely focus on home-run investments. They lust over the memes on social media, like:
“If you invested $100 in BigCompany in 2003, today would be worth $9,000,000. Yeah, that looks about right.”
The smartest investors are not those taking the biggest risks or those backing the next biggest social media app. The smartest investors are those that look beyond ROI.
Investments are not about watching the value of your portfolio grow and grow or just the ROI. It’s about something more.
The problem with ROI is that it doesn’t tell you the whole story, and it doesn’t take into consideration the goals and outcome of you, the investor.
So what is better than ROI?
For the smart investor, it’s time – free time – the kind that can only be achieved through generational wealth – the type of wealth that will allow them to work because they want to work and not because they have to.
They seek freedom from the daily demands of their work or business. In other words, they seek more free time – the ability to spend their day and evenings as they want.
For those who haven’t reached the apex of wealth, everyone is trading time for money. The higher we go up the economic ladder, the more you’ll find people willing and able to invest in exchange for more freedom; freedom from the demands of a job or business.
Those on the upper rungs of the ladder with more income are in a better position to free up more capital for income investments. The main goal for many is to increase their passive income in order to replace either a portion or all of their earned income.
The further down the ladder we go, everyone is trading their time for money.
Many are working paycheck to paycheck and could be perpetually stuck trading their time in exchange for a check. To escape, they need to make more money and increase their investment portfolio. Ultimately, it would be ideal to invest for income.
So how do smart investors buy more time?
They invest in passive income because with no more time in the day; they must find a way to make money in their sleep.
So, what types of investments do they seek?
They’re willing to leverage the time and expertise of others to generate this passive income. They seek out private investment funds that offer cash flow with the potential for appreciation.
What types of assets do smart investors gravitate towards?
- Natural resources, land, real estate, and cash flow businesses.
- Because these are the only types of assets that can create income while they sleep.
- And it’s only through these types of assets can income be generated that can be reinvested into other cash flowing ventures to create a compounding effect.
If an investor commits to investing $1,000 a year in an investment paying 10% a year, a $1,000 in the first year becomes $1,100 the next year when added to another $1,000 becomes $2,100 that grows to $2,310 the next year and so on.
A fund acquiring natural resources extracts those resources then takes the profits from selling those resources to expand operations or to acquire more rights to extract even more resources.
The business owner uses office space and resources to peddle their products or services then use the profits to expand the business by acquiring more office space and resources.
A real estate investor converts a building and land into rentable space and uses the income to acquire more rentable space. Smart investors seek cash flowing funds to compound their wealth.
Smart investors look beyond ROI. They’re investing for true wealth, the kind of wealth that will gain them more time and eventual freedom – freedom to do what they want.
The key to true wealth – the kind that you make even as you sleep – is leveraging the expertise and time of others to trade money for more time.