Not all roads to wealth are created equal. At least, not how I see it…
So Richard Kiyosaki said that there are three roads to wealth: investing in financial assets (including stocks), investing in property, or running your own business.
These are the roads to wealth.
Is any road better than any other?
Yes. Property is the best.
(What? Were you expecting something more even-handed? If you want balanced, see a see-saw.)
To my mind, property is hands-down the best way to build wealth.
Now, people who know me might think that this is strange. I didn’t “make” my money in property. I made my money by building and running a company that kicked arse in sales and marketing.
I actually came to property fairly late in the game.
But I tell you one thing. Having gone on the full journey with running my own business, and having done a fair bit of active investing (particularly shares), I can tell you that the easiest million I ever made was in property.
The quickest million I ever made was also in property. So was the fattest return-on-investment million. And so was the lowest-risk million.
It’s this first hand experience and these –est millions that convince me that property is the best (quickest, safest, easiest) way to build wealth.
(… if you do it right, obviously.)
Now, I don’t want you to take my word for it. And I can’t give you the years of experience I’ve had, so I sat down and did a bit of thinking about why I think it’s so awesome.
I think it’s really about two things: it’s about how much control you have over your path, and whether the world has your back or not.
And just because I like charts, I’ve mapped out where I think each wealth path sits along these axes. It looks like this:
The y-axis here is control. This is about how much influence you can have over your end result.
On this metric, I put running your own business on top. When you are building and growing a business, it’s all about you. It’s all about the decisions you make and the things you do.
In fact, you have so much control (and responsibility), that it’s almost overwhelming.
Winding it back a little from there is property. I’m not talking the simple buy-and-hold strategies that most sheepvestors get into. I’m talking about active property investing – where you’re making deals and manufacturing growth.
There is a lot you can do to get the returns you want – renovations, subdivisions, developments… the list goes on and on.
Down the bottom is stocks and other financial assets. The way I see it, there is very little control you can have over your wealth-engine here.
Sure, you get a bit of agency when you choose which investments to buy (though studies show that most people over-estimate how good they are at doing this).
But once you’ve bought the stock, or whatever, there is literally nothing you can do about it. There is nothing you can do as an ordinary share-holder to influence the stock’s price or return.
In fact, if you try, it’s called ‘manipulation’ and you can end up in jail.
So, personally, that’s not that attractive. I like to have control. I like to be able to influence my returns.
Because if you don’t have control, you’re just gambling.
So this is one area where property is a strong performer.
The next factor is whether the world has your back or not.
What on earth do I mean by that?
Tune in next week.