The following investment Surprises are divided into three parts. The first part is Investing and You. These are the things you need to know to succeed with investing. The Second part is Investing and Real Estate. This is how real estate investment can affect your retirement plans. And the Third is Investing and Your Purchasing Power. This is how you can protect your purchasing power in retirement. Let’s dive into the details.
Investing and you
1. It is Not About Investing it is about getting the Desired Result.
Everyone I know is investing but only a few people are getting the desired results. And until you get the desired results you are still in financial bondage. Why is this so I ask my prospect, congregation, and clients. The answer is always the same -the economy. While the economy can be blamed for the health of your investment, the economy is not the major culprit here. You can still invest successfully in an unstable economy. This is how all developed economies were above to lift their societies to develop.
The main problem here is You. You are investing with a losing strategy. You are investing where you should not invest. You are mixing up the correct order of investing. And you are having too many of the same assets. All these combined is what is producing the below average results.
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If you need to get to Lekki-Lagos for example, for a 10am appointment that guarantees a N1 million cheque if you get there on time. And if you woke up early, started your journey on time but could not make it to Lekki at 10am because your car broke down at the third mainland bridge. Would you say the journey was successful? Yes, you left home early. And yes, you started the journey on time. And in fact, you even made some progress. But you missed your main goal. A lot of people are investing this way. They are making progress but not achieving their main goals. What are the main goals that would matter in retirement? Do you know how to achieve them? Do You Know when they will be achieved? And is your current investment strategy supporting these goals?
There seems to be a myriad of investors but only a few have achieved financial freedom. If you continue to invest in a random manner without absolute focus on financial freedom and a clear date for which financial freedom can be achieved. You would enter retirement financially naked. True investing success is not about investing or making some marginal progress. True investing success is about accomplishing specific life goals that will matter in retirement.
2. The Investor’s Financial Capacity is the key to Investing Success
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One of the big problems I see many people make in the investment world is to focus too much on the investment vehicle. All of us have our favourite investment vehicle and you often hear things like I like this investment, or this is the Investment I want to do next. Although the choice of investment vehicles can affect your investing success. They are not the main consideration here. Your focus should be on getting the investments that can produce the desired results for you, whether you like them or not. And to also do these two things well.
There are two things that will determine your investing success. The first is your financial resilience. That is your ability to absorb your chosen investment benefit, the investment risks, and the Investment drawbacks. The Investment benefits are the returns or cash flow you get from an investment. Every investment produces some level of returns. Investment risk is the nature of the investment, that exposes you to the risk of losing your income. Every investment has a risky nature. But some investments are riskier than others. The investment drawbacks are those things that make an investment less perfect for you. That is those things you wished were different. You must have the financial resilience to absorb all three investment returns.
Second, you must have the financial capacity to extract the greatest benefit from an investment. Every investment has two bands of profit- the most profitable band and the least profitable band. The more cash reserve you have the more you would be able to within the profitable band and vice versa.
Thus, when people say they have been hurt by an investment. It is not the investment per se that hurts them. All investments have fixed characteristics and attributes that are pretty much predictable. What hurt them is their lack of financial resilience to absorb the good, bad and ugly or their chosen investments. And their lack of financial capacity to play at the most profitable level.
The big question for you is what kind of investment results are you seeking? Which investment vehicle can give you these results? Do you have the financial resilience to absorb the good, bad and ugly? Do you have the financial capacity to play at the most profitable level?
Answering these questions will give you an idea of where you stand.
Successful investing is not about the investment vehicle. It is about the Investor. To succeed as an Investor, you must know three things well. The first is the right and most profitable use of an investment vehicle. All investments have their optimal use. The second is the right order of investing. Investing has a profitable order of progression. If you miss the order, you can lose your savings. And third is the right partners. Investing is about trust, competence, and credibility. Who you take advice from and who you invest your money with can affect your investing success.
To have a restful retirement you must not just invest, you must focus on increasing your earning capacity, saving big and building solid cash reserves.
If you need help achieving your investment goals, we can help you, send an email to firstname.lastname@example.org
3. You would Need More Liquid than Solid Investments in Retirement.
Life operates by liquid cash and not by assets. Thus, the most important asset to have in retirement is income and not assets. Investment income is produced in two ways-First it is produced through liquid assets investing and second through solid asset investing. Liquid asset investing is investing that preserves your invested capital in the liquid form. This means that you can easily get your money when you need it. Solid asset investing is investing that converts liquid cash into solid assets. This means that it may be difficult to get your money back when you need it. The best way for me to illustrate the difference between liquid and solid asset investing is to use the illustration of freshly prepared soup. Imagine for a moment that you just prepared a delicious bowl of soup that will last for the next two weeks. To preserve this soup, you have two options. The first is to store it in a Fridge where it can be preserved in its liquid form. form. And the second is to store it in a freezer where it is converted from its liquid form to a solid form. Now imagine that after a long day’s work you are tired, hungry and want to eat quickly. Unfortunately, you can only eat liquid and warm soup not solid or liquid and cold soup. So, you must convert the soups back to their usable form.
The soup in the freezer will give you a hard time to convert if you do not have a microwave. There would be delays, frustration, anger and even pain? This is exactly what you may suffer if you enter retirement with mainly solid assets.
The soup in the fridge is pretty much easy to liquidate. All you need to do is scoop the right portion and warm it. This is how easy life would be for you if you go into retirement with more stable liquid investments.
It takes time to liquidate solid assets and this time can sometimes run into years. Life would not halt while you are trying to liquidate your assets. And life does not run by assets, it runs by cash. Thus, the more accessible cash you have in retirement the more rest you would have. While you should have some solid assets. The key is to not bank on your solid assets to sustain you in retirement. You may not get your money when you need it.
Effective retirement planning is about Income accumulation, Income Protection, and Income Transfer and not Asset Accumulation. Asset Preservation, and Asset Protection.
4. Only Long-Term Investing Can Buy You Financial Freedom
All investments are designed to produce the greatest benefit over the long-term. This means that all short-term passive income is for operational and lifestyle maintenance. This income also experiences the most fluctuation and losses than long-term income. Thus, if financial freedom in retirement is what you seek you must stop wasting time with short-term investing. And focus on long-term investing that can deliver the right results. The more time you spend engaging in short-term investments. The more likely you would lose money and not achieve your retirement goals. The only short-term investment that works in real life is the investment in yourself. And even this sometimes does take time.
Financial freedom takes about 5-15 years to achieve depending on your financial capacity. The length of time it takes has little to do with the investment as certain investments can give you financial freedom within months. The length of time it takes has a lot to do with the investor’s own financial capacity as shorter-term investments are extremely expensive. This means that to achieve financial freedom as a working professional you need to invest long-term, use the timing to spread the cost and get the desired results or you can build the cash reserves necessary to invest in shorter-term options.
But what if you already have a few years or months to retirement, what should you do?
If you are a few years or months to retirement, long-term investing may not perfectly work for you. However, you need some form of medium-term investing or the cash reserve to absorb the expense of a shorter-term investing. Although you would be able to achieve some results before retirement, the truth is you may not be able to achieve optimal results. Anything done late has its consequences and so is late retirement planning. But below are some of the things you can do to get started right away.
First, review the kind of assets that you have that can help you can catch up for lost time. The desirable assets include…
- Allowances and bonuses that can be freed up to fast-track your retirement goal.
- Large savings and cash reserves.
- Rental Income that can be repurposed for your retirement goals.
- Large-sized gratuity payments at the end of your career
- A large-sized pension fund.
- Post-retirement contract work, side hustles, or any kind of supplemental work that can produce an extra source of income.
- Sound health to keep medical bills out of the window.
The second thing you can do is earn multiple incomes. To earn multiple incomes, you need to develop high-income skills. You need to build rich relationships. And you need to focus on side hustles that can give you high income with minimal workload.
It is the combination of smart work, high income, delayed gratification, disciplined savings, and focused investing that would deliver the right results for you.
If you need help making the most out of the time and resources, you have left. We can help you. Send an email to email@example.com
5. There May be No Rest in Retirement.
There are two areas of life that you need rest from in retirement. The first is the area of work. You need rest from stressful and physically draining work. And the only way to get this rest is to create passive income. And the second area is in the areas of income. You need rest from financial worries and stress. To get this rest you need to do two things. First, you need to move your source of livelihood from active income to passive income. And next you need to build the size of passive income that can sustain your living standard in retirement. These two types of rest are only made possible with the right amount of income.
This means that rest in Retirement is not automatic because rest is not a function of retirement. Rest is a function of financial peace. And you only get financial peace of mind when you have a stable income. I am yet to see anyone who can rest amid immense financial pressure. Thus, if you want to have absolute peace of mind in retirement you must create income that makes rest possible for you. If this income is absent, there would be no rest in retirement.
So how do you achieve rest in retirement?
To achieve rest in retirement you must build a solid passive income foundation. This means that the income you build must give you the option of getting rid of ongoing work if you choose to. To build this kind of solid income foundation you need investments that are stable, consistent, and adaptable to the changing economy. Thankfully, there is a way to achieve this goal. This way involves doing three things well. The first is earning high and multiple incomes. The second is saving big and building solid cash reserves. And the third is to focus on investing for financial freedom so you can enjoy absolute peace of mind.
About the author
Grace Agada is the most sought-after Financial Planning expert for high income professionals, CEO’s and Top Government Officials. She is quoted frequently in leading National Newspapers, magazines, and blogs. Grace is a Renowned Keynote Speaker, Author, and Column Contributor in Punch Newspaper, This Day Newspaper, Vanguard newspaper, Business Day Newspaper, Leadership Newspaper, The Tribune Newspaper, and Online Platforms like Nairametrics, Proshare, Bellanaija and Newstimes. Grace is the Founder of “The University of Wealth” The author of “The Financial Freedom MBA Programs”, “The Better Life Retirement Planning Programs” and “The Wealthy Business Blueprint”. Grace is on a mission to shrink the middle class and populate the upper class. And help the middle class become valuable assets to themselves, organizations, and the world. She has been featured on BBC Africa. Business Day TV. Inspiration FM. and inside Naijatv. And she consults for Numerous Top Organizations, Company Directors, CEOs, Senior Executives, Top Government Officials and High-Income Professionals.