The more I research about the ways people get rich the more I’ve come to realize something.
It’s all the same stuff, over and over again.
I’ve started listening to the Bigger Pockets podcast, which profiles real estate investors. Each has a similar story. They saved up some money and bought a house. They then came up with a down payment to buy another house. And so on.
The details may differ a little, but the process is the same. One guy had a bunch of money after saving for years, so he was able to build things up a little faster than average. Another guy used private mortgage loans as short-term money, refinancing once he made some improvements to increase the value of his property.
I was a little more patient when I built up my real estate empire, physically paying off the first property before moving onto the second one. But I did acquire the third one while still owing money on the second. At my peak I probably owed 1.5 times my annual income, which isn’t a whole hell of a lot.
It’s the same thing with stocks. All it takes is buying shares consistently of good companies, and you’ll eventually get rich. Even if you start when markets are overvalued. Dollar cost averaging will take care of it.
It doesn’t matter if you buy dividend growth stocks or value stocks or even just indexes. It’ll work out if you give it enough years. The only thing stopping anyone is making enough to create a big savings rate and the patience to do so over a long period of time.
This stuff isn’t hard. All it takes is dedication.
Don’t reinvent the wheel
Liquid, the author of Freedom 35 Blog, said it nicely during his last income update:
I used to believe that you have to be smart to make a lot of money. But apparently I’m living proof that someone with an average intellect can do so as well. I modelled [sic] my financial plan based on the brilliant minds that have already figured out the formula for success. All of my investment ideas and strategies can be boiled down to one simple philosophy; Do what other successful people do.🙂 That’s it!
After much deliberation I kept the emoji in.
Emojis aside, Liquid makes a fantastic point. Some of the greatest investors in history have been incredibly generous sharing all of their secrets with the world. Warren Buffett quotes are more prevalent than hipsters in Brooklyn. Hundreds of successful investors have written books about what makes them tick. And there have been thousands of business biographies published over the years, each containing lessons you can apply to your portfolio.
One of the things I really like about investing is there’s no one way to succeed. Walter Schloss, one of my favorite value investors, literally bought the worst companies he could find. Buffett did the same thing until Charlie Munger set him on his current track.
Real estate investors are the same. I know guys who have made succulent returns buying the cheapest shithole rentals out there, and I know other guys who made their money buying nice stuff. I even know someone who owns a trailer park, which might be the best investment (from a numbers basis, anyway) I’ve ever seen.
These guys aren’t reinventing the wheel to get rich. They’re not even doing anything really unorthodox. They’re just going out every day and finding decent opportunities and putting their cash to work. They don’t waste time trying to find a new thing. They find what works and do it over and over again. That’s how you get rich.
It’s all about execution
I stumbled upon a post in the Reddit Entrepreneur sub the other day that went something like this:
PM me to discuss a highly lucrative idea. This will make you a million, guaranteed! Note: you’ll have to sign a confidentiality agreement before we seriously talk.
He got roasted in the comments, and rightfully so. There’s no such thing as a million dollar idea. Ideas are worthless. It’s all about execution.
Investing is similar. We all have stocks that we analyzed and then didn’t invest in. I still remember McDonald’s in 2003 right after Super Size Me came out. It was a rare opportunity to get a great company at a fantastic price. But I balked, losing out on a massive opportunity.
I’ve said this a million times. Research is important. But once you’ve done your due diligence and feel comfortable, you gotta execute. It doesn’t matter if you’re starting a new company or investing in something.
The bottom line
Folks who invest on their own are usually pretty good at analyzing, but pretty bad at taking the next step. It doesn’t have to be that hard to get rich. Just make sure you execute. And remember, plenty of other people have already done exactly what you’re trying to do.
Stumped for investing ideas? Aren't we all. Don't worry, I've got just the thing.
This recent Canadian IPO has everything I look for in a stock. It has huge growth potential; a succulent dividend; a sharp management team; and, perhaps most importantly of all, it comes at a very reasonable price tag because most investors don't even know it exists.