The Best Financial Advice Has Nothing To Do With Saving and Investing, It’s About Building a Money Machine
Here is how I am building my money machine
It seems that Dave Ramsey has only one finance lesson: free from students debt loans.
Other finance gurus on money Twitter advise the following:
In 10 years, you will become a millionaire if you:
Save X percent of your income.
Invest Y percent of your income in the financial markets.
But is that all finance and economics is about?
One of the biggest mistakes I made when I read a lot of books about personal finance and economics was thinking that I needed to become a finance guru to make a ton of money in the stock market.
I consumed a bunch of videos, blog posts, and Podcasts about how to build a bulletproof stock portfolio, Inclusive how to have higher returns than the S&P 500 index, achieve financial independence faster, and retire at 31.
I was very wrong.
But that’s not the problem, the big problem with investing when you are in your 20’s and such, is that even with better returns than the S&P500, I didn’t have enough capital to keep making constant contributions.
Let me give you an example to make it simple:
What if I had invested 80% of my savings? If I had saved the money from the movies and bought X shares of Y company?
If I had invested $10,000 that I saved and dropped my apartment to live with my mother to simplify my lifestyle, my total return in dollars would have been $2,000. But that is not enough money that would change my life.
And most college students don’t even have an extra $2,000 to pour into the stock market.
The Best Advice About Finance is About Building Money Machines
Unless you want to be the next Warren Buffett you should just focus on the financial markets and invest ⅔ of your income.
20-somethings like me should focus on building themselves money-making machines.
It doesn’t matter if you should learn new skills, graphic design, teach English to people who want to be fluent, learn HTML5 or any programming language.
What matters is gaining work experience and finding ways to get paid for what you do.
The more skills and experience you collect and the more scalable your business is, the more money you can make. The more money you make, the more you will have to invest.
With my side hustle of online writing, I could make maybe 5 figures this year alone. Or if I invested all the money I saved to create a stock portfolio, I would need exorbitant returns (80% to be exact) to earn close to $8,000 in dividends. Read this again to understand.
Build Your Money-making Machine First, Invest Later
When you are in your 20s and 30s, income is your wedding cake. Investing is the icing on the cake. Make a really big cake first and then put the icing on it.
That means you must build scalable income streams, or find ways to get paid well for what you do.
Like anything else you do for the first time, you can make some mistakes.
When you first try to build your online revenue streams or try to be a full-time digital entrepreneur, you will make all kinds of mistakes, but it is the only way to learn.
With mistakes, time, and connections with other entrepreneurs, you will discover how to optimize your side business and learn how to make more money in a short time.
I am sure I will discover ways to make even more money with my side hustle of online writing.
I’m not like I was before anymore. Obsessed with reading every book on finance, saving, investing, business, and self-improvement that I could find.
Instead, I’m focused on making more money through my day job and my online writing side hustle.
In fact, my corporate job and my online writing side hustle are helping me build third stream income from passive investments.
Achieve Financial Freedom and Maintain Your Money Machine
As time goes on and my net worth only increases, the returns from passive stock investments will begin to contribute more and more to my net worth, make me financially free and retire at 31 (but I’m not retiring, “ever”).
As you can see, it’s all about income.
From now on I will be more focused on developing my online writing skills and increasing my online income to 6 figures.
With a 6-figure annual income and returns from passive stock investments, albeit with small amounts of dividends, it will always outweigh a low income I would make if I didn’t focus on my money-making machine first.
I used to check my brokerage account all the time. Now I check PayPal and my online banking frequently to make sure I am getting paid by my clients with my ghostwriting work.
This article is summed up like this: For you who are looking to accumulate financial wealth: create your money-making machine.
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.