Joseph R Weiland, CRP®, Managing Partner
In 1849 the state of California became populated by people that rushed to the state’s goldmines in the Sierra Foothills. There was news of gold in the hills and the gold fever caused them to walk away from current work, families, and lives to chase the dream of riches. They were called 49s and some of them became rich permanently, some were rich for a time, and some were late to the party, spending their hard-earned funds to get to the gold fields that were either already owned, already emptied or never productive. The majority found themselves back in their normal lives (perhaps with the better weather that California offered), looking for a job that would pay their bills, keep them with enough money to be entertained until the next paycheck. Or they needed to earn enough money to pay back the people that lent them money to chase their California dreams. But they needed to work. They did not achieve the wealth or freedom that it can offer. Just years older and no better off.
Our country has a long history of people chasing opportunity when it pops up. The Sooners rushed into Oklahoma to start their farms, the railroad boom saw new tracks crisscross our land in the 1880s and early years of the 20th century saw people chasing land speculation for oil development. House flipping, internet stock speculation, day trading and somewhat recently Bitcoin and Crypto currencies have been a short cut to wealth. Like the gold fields of California, each one of these phenomena had intense interest, explosive price increases through speculation and a collapse in prices and values back to a long-term sustainable value. This leaves those that were late to the party or unwilling to sell at high prices licking their financial wounds and hoping to recover. Oh, and a few coveted examples of people that became rich.
Rich is the goal. Fast is best. That is the goldrush mentality. As easy as this sounds it is not. If it were easy, everyone would already be rich. To take this one step further, if everyone that was once rich was still rich, we would have far more rich people. At Arlington, we have a get rich slow, stay rich forever plan that works every time. Only some of the people that learn about it are interested. How can it be that people are not interested in a sure thing? Are they lazy? Ignorant? Foolish?
I do not think that it is this simple. People are interested but they are seduced by one of our country’s great myths, the Goldrush Myth. If we can just figure out the right thing to buy or do, we will receive unbelievable riches. If we can find the gold nuggets, if Tesla stock can double one more time, if my company stock can hold on through an IPO, then all my financial stress and problems will be solved. The Myth and hope keeps people from doing to simple things that they need to do to ensure that they build wealth over a lifetime.
Living within your means, creating a monthly surplus that is saved, establishing, or contributing to a pension plan, using debt only as a financial tool, holding well managed, diversified investments that allows you to safely become part of the ownership class. None of these are quick fixes, they are tools to get you to financial security. They are all part of financial context that ensures that you become financially secure. Able to choose how to spend your time. Rich.
Diversified business ownership investments grow two ways, as profits and innovation pay off and as the economy grows. Historically the returns of a well-managed diversified portfolio have been 10% or better over multiple market cycles. By investing 10% of your income every year, assuming you are earning 10% on your investments you will be recreating your income each year for the rest of your life in 25 years. Staring at ag 30 you have reached this goal by age 55. By 62, your growth will be double your salary. If you invest more than 10% this happens faster.
These ideas cause most people’s eyes to glaze over. It holds none of the charm of unearthing a shiny nugget of gold, telling your friends you are an entrepreneur, day trader or crypto-miner. It is as boring as housework. But it works. Every time.
Arlington’s role is to help people understand the simple steps outlined above, make certain that they are being followed and encourage our clients as they take this steady train to a secure future. Everyone is in a different spot. Some are young and getting started, some have just inherited funds, others recently divorced, sold a business or still licking their wounds from the recent crypto crash. Each of these people needs a clear path and the steady guide of someone that has seen it all before.
If you understand the growth of your wealth and the options it brings you, you can choose to hire someone to do the housework.