How Do You Mitigate Risk?
In my last article, I discussed the risks involved in obtaining a life of true financial freedom that is filled with fulfillment, passion, and purpose. The good news is that you can significantly mitigate these risks and take control of your financial future by creating multiple streams of income.
Multiple streams of income are a game-changer. They give you the ability to control your time, reduce stress, and plan for the future. In contrast, if you have your retirement savings wrapped up in a single investment, it can be very limiting and nerve-wracking. This is especially true if that investment is dependent on the unstable economic conditions of Wall Street and managed by someone else.
Many of us realized this when COVID hit. Our typical line of income where we trade hours for dollars was shut down for a period of time. For those of us with other streams of income, we were able to survive and even thrive through this turbulent time. For others with their funds locked up in a 401(k) savings account with a financial advisor controlling their assets, the stress and risk increased dramatically. Specifically, 401(k) accounts do not let you access your funds until you are 59.5 years old without a substantial fee.
This means that you must sit idly by as you watch the stock market roller coaster wreak havoc on your funds. Also, realize that most young money managers today have never experienced today’s economic conditions. They just sell what they know, tell you to “wait it out,” or follow standard company guidelines to earn a commission, whether or not it is beneficial to you.
Take Control of Your Financial Freedom.
It’s easy to do what everyone else does. But when you hand your well-earned nest egg over to a money manager, you lose control and significantly increase risk. Instead, take the time and effort to learn about building wealth in assets that produce cash flow, and not just growth, so that you can have a source of reliable income… no matter what the stock market does. And I’m not just talking about security when you’re 65 or 70. I’m talking about alternative investments that provide sustainability when there’s a recession, a downturn, a COVID variant, or some other event beyond your control.
What are Alternative Investments?
Alternative investments encompass almost everything outside of the standard Wall Street financial marketplace and move beyond stocks, bonds, mutual funds, and ETFs. They include investments in real estate, private equity, oil and gas, collectibles, precious metals, and other commodities.
Among these alternatives, I have a bias towards real estate because it allows me to invest in real tangible assets that provide real-world value and generate cash flow. Its inefficiency, as opposed to the hyper-regulated financial markets, means there’s less room for large-scale manipulation. This gives smaller investors a fighting chance to mitigate risk. However, it’s important to know that investing in alternatives isn’t a walk in the park. It demands diligence, concentration, and sifting through various opportunities. However, the control is worth it.
Back in 1980 when I was in school and had more time than money, I bought my first property by partnering with my father. I put in the work and eventually navigated the transition from “landlord” to “investor” over several years. Today, I no longer manage properties or deal with tenants and contractors because that’s not how I want to spend my time.
Instead, I utilize specific frameworks and carefully nurtured and vetted strategic relationships to be a passive investor. I can make smart decisions that give me the best results for my specific goals… now and in the future.
The important thing to remember is that it’s not rocket science. As someone who made it through all of the challenges of dental school to become a successful, practicing physician, there’s no reason you can’t use those same skills to take control of your finances. It’s all about finding a network of like-minded individuals who can give you the vetted information, education, and support necessary to make smart decisions.
No, alternative investments are not the “easy route” and require more intention and effort than following the status quo of Wall Street investing. However, they have sustained me through decades of market shifts, corrections, and volatility, and I know they work. I sleep well at night and spend my days doing what I want, when I want, with the people I want… true financial freedom. If this sounds like a better alternative to the stress and risk you’re experiencing now, I encourage you to get the information necessary to make positive changes happen and take control of your financial future today.
ABOUT THE AUTHOR
When his young daughter was hospitalized with leukemia, Dr. David Phelps, DDS could turn to his alternative investments, step away from his dental practice and be by her side.
From this experience, he created Freedom Founders in 2012. This community helps dentists and other professionals take control of their retirement investments to produce passive cash flow, security and live life on their terms. To contact Dr. Phelps, visit www.freedomfounders.com.