Bullet-Proof Wealth: Four Keys to Economic Self-Reliance

“The fiscal crisis will continue until morale improves.”
- The Washington Post

The 2013 Government Shut DownThe government shut-down that started yesterday will hit many Americans right in the pocket-book. Some have had their jobs suspended, effective immediately. Others could have paychecks or benefit checks delayed. Millions of non-government workers will be hit as well, such as those whose livelihoods depend on travelers flocking to Yellowstone, Yosemite, the Statue of Liberty, the Smithsonian Institution, and hundreds of other National Parks and Museums.

As with past government shut downs, our politicians will eventually find ways to compromise and re-start the federal engines. But in the meantime, we would be wise to contemplate what lessons might be gleaned from this event. Specifically, how can we increase our own economic self-reliance, even as the government goes on strike for lack of funds?

Regardless of our job, our business, even our investment strategy, “stuff” will happen. It’s unavoidable. However, you CAN avoid derailing your prosperity when the unexpected happens! The real question is, how can you prepare for the unknown and continue to prosper in spite of it?

Put these four keys into practice and you’ll become financially bullet-proof:

Self-Reliance Key #1: Take Your Income Into Your Own Hands

Self-employed people are much more likely to become wealthy.

Doctors, lawyers, accountants, and other self-employed individuals are more likely to build wealth, as are all kinds of business owners. Simply put, a job is not necessarily the best path to wealth. If you are an entrepreneurial spirit, you increase your chances for building wealth. According to a study by financial author and expert Bert Whitehead, while only 20% of our population is self-employed, 75% of millionaires are self-employed. (It’s been said that “wealth leaves clues,” and that’s a clue.)

There are several reasons for this correlation. First, when self-employed people develop the ability to find customers and make sales, they become immune to unemployment. Secondly, those who work for themselves create their own income, and can raise their own glass ceiling. Last but not least, being an entrepreneur develops a different mindset than that of an employee.

Anyone who owns a successful business has learned valuable skills, from the secrets of managing time, people and money to how to generate sales with marketing. Yes, these skills can help you land a better job. They can also eliminate the need for a job, or allow you to start a profitable business either full-time or on the side.

As Kate Phillips pointed out in her ode to self-employment featured on Biznik.com, “Why Entrepreneurs Rule the World,”

We’ve put our faith and trust in the wrong places, counting on an employer or a company to sustain us, when we should have been developing our own value in the market place. We can no longer count on jobs to sustain us, rescue us, or bail us out….

In case you didn’t get the memo: Jobs are Dead.

Don’t expect that everyone will “get it.”  Our culture does not yet know how to support the entrepreneurs in our midst. (Apply for a home mortgage with a new business, even a profitable one, and you’ll see what I mean.)

People believe that being a business owner is risky, but I believe that having only ONE source of income – ONE source that can be terminated at any time (typically by ONE person) – is the real risk.

The myth of job security will continue to persist; but income security is the only security you want or need.

Which leads us to…

Self-Reliance Key #2: Diversify Your Income as Well as Your Investments

You don’t want all your eggs in one basket. Neither do you want to limit yourself to one goose.

Most everyone understands the concept of investment diversification and asset allocation. Don’t put all of your dollars into the stock market, into bonds, or into one type of real estate. But what, exactly, is income diversification? When it comes to income, diversification looks like having more geese laying those eggs.

While self-employment and business ownership may make you literally “fire-proof” in terms of layoffs, business owners can still be very vulnerable when their source of income is too limited. For example, a real estate investor who only bought only New Orleans properties would have been severely affected by Hurricane Katrina. Likewise, a book publisher who does not flex their business model to reflect trends such as Kindle or self-publishing may soon be out of business.

However, when you are an entrepreneur who develops multiple streams of income, including passive income, your income becomes truly diversified and secure. Generating reliable and diversified income is an important step to building bullet-proof wealth, but making money is only the first step to creating wealth.

Self-Reliance Key #3: Save like a Millionaire

The average millionaire saves more than 15% of their income and could live comfortably on their savings for more than 12 years.

While the average American thinks that millionaires are the folks who drive new luxury vehicles and live in big houses with views, this is a mistaken view of the wealthy. Indeed, when Thomas Stanley and William Danko started interviewing the wealthy, one observer (who leased a new luxury car and wore a $5,000 watch and designer suits) declared:

“They don’t look like millionaires, they don’t dress like millionaires, they don’t eat like millionaires, they don’t act like millionaires…. Where are the millionaires who look like millionaires?”

Their research became the basis for The Millionaire Next Door, which found that most of millionaires considered themselves frugal. The great majority of millionaires were self-made, drove later model cars, preferred roast beef sandwiches to caviar, and lived nonchalantly in middle class neighborhoods.

We’ve all heard that “it’s not about how much you make, it’s about how much you get to KEEP.” And it’s true. The hundreds of millionaires interviewed by Stanley and Danko reflected this theme. For them, money was the ticket to freedom and independence, not something to trade for consumer goodies and status symbols. The median household income for the millionaires interviewed for the book was only $131k., and they attributed their financial success not to the size of their income, but to their ability to save and invest a large portion of it.

But what if the money you save so diligently isn’t safe!?

In the last few years, we have seen first-hand the instabilities of the government, the stock market, the economy, and the real estate market. It has been said that the only constant is change, and much of that change will not be in your wallet’s favor. Which leads us to…

Self-Reliance Key #4: Don’t Leave Your Wealth to Chance

A fool and his money are soon separated — so don’t be foolish with your money!

One way to make assets vulnerable is to put them in someone else’s control. When our dollars are subject to market crashes, never-ending fees, and unnecessary or future taxes (especially at yet-to-be-determined rates), wealth-building becomes unpredictable at best.

Robert Allen once asked in a seminar, “Do you want to get rich quickly or slowly?” to which most of the audience members shouted back, “Quickly!” But the answer Allen was looking for was actually “BOTH!”

As he explained, before any investor goes trying to double or triple their ROI, they need to learn how to “get rich slowly.” After all, that should be the easy part! But too many investors are so busy trying to “time the market” or find the magic stock-picking software that they never learn how to save consistently. Then, they make matters worse by trying to compensate for a lack of savings with even greater risks!

Once investors establish consistent, preferably automatic savings habits, they are ready to diversify into other investments. Sure, you can (and should) accelerate your wealth-building by finding investments with higher rates of return. But very few wealthy people are willing to take the kind of risks that average Americans are talked into taking every day by 401(k) administrators and typical financial planners.

We have come to equate “investing” with speculating, or worse, gambling with our assets. We purchase shares and cross our fingers that the price goes up, meanwhile, Wall Street hedge funds bet against us and high-speed trading machines skim the profits for institutional investors.

But the wealthy don’t gamble with their hard-earned dollars. As a matter of fact, Stanley and Danko found that millionaires held only 20% of their assets in the stock market, preferring to keep the balance in business assets, guaranteed investments, and real estate.

Is it time to Bullet-Proof YOUR dollars?

When the Dow starts boasting new highs, we know that it’s only a matter of time before the market heads downward again, like a roller coaster that has reached the top and is now pulled down by gravity. We can help you get off the roller coaster and onto the Prosperity Pathway, establishing true economic self-reliance for yourself and your family.

Whether you’re looking to start an Income for Life fund utilizing permanent life insurance, or whether you’re an accredited investor looking for superior returns, our team can assist you. Simply contact us today to set up a no-obligation consultation, we’d love to help!

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