“The goal of investing is to provide you with the financial freedom to live life on your terms.”
– Tony Robbins
Everyone talks about financial freedom.
But what we really want is time freedom.
Time to do what we want, when we want.
Sounds pretty nice!
Now, what can we do as investors to maximize our time freedom?
How do you allocate your resources?
What’s the tax strategy?
And, most importantly, how do you develop a network that can help you on this path?
We’re going to go over all of that and more in three easy steps.
Let’s jump into it!
1. The Importance of a Diversified Investment Portfolio
Warren Buffett says wide diversification is great if you don’t know what you’re doing.
However, I think having some diversification is good.
If you have a struggling asset, owning other investments to make up for that struggle is important.
I used to be an investment advisor.
Back then, one of the most challenging things was figuring out how to allocate.
Let’s say somebody has a net worth of $2 million.
How do you allocate that among real estate, alternative assets, or different types of investments?
No one can really tell you that.
There are many factors that make each investor different.
Your risk tolerance, your age, your net worth.
People can determine a suitable plan depending on each facet.
But it’s a very difficult process.
Having some diversification can help with this.
I also like to diversify in styles of payment.
Having some long-term investments with higher upside as well as some mid-term and short-term cash flow.
Investing in different styles of investments can really help you along the way.
Studies such as this one from the Financial Literacy eJournal have stated that diversification can also reduce volatility without sacrificing expected returns.1
2. Tax Strategy is Key to Your Approach
As you make more money, you have to find a way to reduce taxes.
People do this in many different ways.
Chapter 9 in my book, Fire Yourself, talks about reducing your taxes potentially to zero.
Now, I’m not a tax strategist.
I’m not a CPA.
I’m not giving you any specific advice – just talking about my own experiences.
When I made over $200,000 a year, I was able to go from a 25% tax rate to about a 1% tax rate.
There are specific strategies I used to accomplish that.
The first was consulting with professionals in tax strategy.
If you reach out to us, we’ll happily refer you to the strategists we’ve used.
I’ve worked with a lot of people that paid too much in taxes.
For example, I’ve seen physicians pay 55% (or more!) of their income to the government.
I also know of a couple of medical professionals in California who sold their practice.
They had a $2 million tax bill, but they found a way to reduce it to $125,000.
They did this by having a tax strategist find specific strategies that worked for them.
It’s not just about how much you make.
It’s how much you can keep and pass along to your heirs.
That’s why it’s so important to have a tax strategist.
They will help you not only with your financial freedom, but also your time freedom.
3. Have Other Passive Investors Around You
You should always aim to have other investors around you.
Specifically, other passive investors.
People who are not trying to sell you things.
That includes even me!
I want you to reach all of your financial goals, but even I still have a bias.
If you’re a passive investor, surrounding yourself with other passive investors will help you grow.
They’ll contribute to what you’re doing.
Jim Rohn says you’re the average of the five people that you spend the most time with.
Who are you surrounding yourself with?
The answer to that question makes a big difference in how you’ll be able to grow your wealth.
That’s where your transformation will come from.
For this reason, we actually created a mastermind called the Wealth Forum.
In the group, we have high-net-worth individuals who network and educate each other.
It’s been a great experience so far!
Networking has also been proven to positively affect innovation performance and productivity, according to this review published in Economics of Networks.2
If you join a group, make sure it’s filled with people in a similar place as you.
In conclusion, allocate your resources based on your goals and your risk profile.
This will lead you to have the time and financial freedom you’re looking for.
Now I want to hear from you!
What will you do with your time freedom?
Before you leave, make sure to check out our special report about inflation investing. It shares the best choices to invest during an inflationary environment.
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Disclaimer: I am not your investment advisor. This is for educational purposes only. I am not giving specific advice on what you can do. I am simply giving my opinions.
Works Cited
1. Nicholas Reinholtz, Philip M. Fernbach and B. D. Langhe. “Do People Understand the Benefit of Diversification?.” Financial Literacy eJournal (2016).
https://doi.org/10.2139/ssrn.2719144.
2. Luke Pittaway, M. Robertson, Kamal Munir, D. Denyer and Andy Neely. “Networking and Innovation: A Systematic Review of the Evidence.” Economics of Networks (2004). https://doi.org/10.1111/J.1460-8545.2004.00101.X.
