Becoming Your Own Banker, Part 32: How to Invest

If you want to build wealth, reach your financial goals for retirement income, and be able to take care of everything from college for your kids to paying for cars, your home, and a lifestyle you enjoy, the most common first question is, “How to invest?” https://www.youtube.com/watch?v=hExdqtiuhto In his signature book, Becoming Your Own Banker, Nelson Nash reveals that changing your financial environment is the lynchpin to financial freedom.  For today’s discussion, we’re returning to the text to talk about financial philosophy - the typical philosophy vs. the successful philosophy, and how to finally get results by changing your thinking. We’ll discuss why rates of return are a red herring, touch on the importance of dividend rates, and explain why you should understand your finances as a system rather than a process. Prepare to redefine success beyond the allure of high investment returns, and instead, learn to master the art of personal finance by controlling your financial destiny. This episode unpacks the necessity of substantial liquid savings and the strategic management of capital, which together forge a path to superior financial control and efficiency. We shine a light on the often-overlooked reality that a substantial part of our income dissipates through financing charges, and underscore the essential nature of a robust emergency fund before taking investment leaps. Venture with us through the evolving financial paradigms, reflecting on how Bitcoin, the expanding US balance sheet, and a worrisome debt-to-GDP ratio are sculpting our economic landscape. Bruce and I explore how American consumerism shapes our spending and the significance of developing a financial acumen that evolves from unconscious incompetence to unconscious competence. With Nash's financial philosophy as our guide, we dissect the drawbacks of conventional financing and celebrate the empowerment that comes from holding the reins of one's financial affairs. Finally, we address the surge in inquiries about judicious fund allocation, proffering not a prescriptive investment playbook, but a transformative perspective on money management. I share effective banking strategies that foster automatic savings and the wealth accumulation snowball effect. As we guide you through the intricacies of financial control, we to equip you with the insights necessary to recalibrate your financial habits for a future rich in prosperity. Join us for a conversation that promises to elevate your financial literacy and position you for long-term success. Philosophy and InvestmentsWhat’s Your Philosophy?How to Invest and Rethink Your ThinkingSavings is ValuableAverage Doesn’t Mean MuchSystem vs. ProcessBook A Strategy Call Philosophy and Investments Investments are one of the keys to wealth-building, because they can help you break out of the “trading time for money” rut, which can, in turn, improve your financial life significantly. By having capital that’s not reliant on how many hours you put in, you can increase your pool of money faster, have capital to use for scaling your business, and so many other uses besides. However, your investing philosophy matters a great deal here. Not all investments work the same, or have the same results. And whole life insurance is NOT an investment, it’s an asset that can help you if you intend to invest, however.  In the Glossary of Becoming Your Own Banker, Nelson shares the Webster International definition of philosophy as “a search for the underlying causes and principles of reality; a quest for truth through logical reasoning rather than factual observation; a critical examining of the grounds for fundamental beliefs, and an analysis of the basic concepts employed in the expression of such beliefs.” Commonly, we see people with an investment philosophy that chasing the highest rate of return makes the most sense. And the reason they think this way is because they want to do the most with t...