Thread by @XDays

WHY YOU MUST HOLD ASSETS THREAD

Picture below shows John D. Rockefeller's empire.

Still turning profits to this day.

Still making the whole family rich.

Wealth comes from assets, not wages.

If your grandfather bought a rental property for $20,000 back in the day, your family is minting money.

If your grandfather put 10% of his paycheck into savings and nothing else, you're going to work.

Don't repeat this mistake.

Your main goal is to buy or build things that appreciate in value over time.

Otherwise you're just stuck running the hamster wheel forever. And that's true whether you're flipping burgers or earning a high income while overspending.

The fastest way to acquire assets is to build them.

Making $1,000 in passive income off investments is going to require about $20,000 or so in up front capital.

Making $1,000 in passive income off a business requires a couple hours of work.

We can argue about capital appreciation, but actively creating assets is much faster than only relying on investments to do the heavy lifting.

Remember, there are Twitter accounts making $10,000 per month posting common sense advice.

$1 million in stocks won't generate that.

Here are two relevant business book recommendations (with Amazon affiliate links) for the curious:

"The Millionaire Fastlane" - amzn.to/3ecI40N

Gold standard for showing you what types of business models actually make money in an efficient manner.

"Automatic Wealth" - amzn.to/3mBf4Tt

All around good advice for growing your income, building a business, investing in real estate, using (safe) leverage, and buying private equity into other small companies.

Well worth reading as it covers all the bases.

Increasing your income or starting a business doesn't always mean you have longevity, however. Most small businesses do fold over time, and anyone running Internet operations will end up going back to the drawing board many times.

Five years ago you could print money with lots of platforms or products that are no longer relevant.

Dating site affiliates used to make bank. Traffic once poured into standard WordPress blogs. And you could write 8 pages of Kindle erotica, put it on Amazon, and charge $2.99.

BUZZFEED and all the clickbait sites are are another good example.

In 2012 this was a great business model. Today, many of these media companies have closed, and the remaining ones are facing huge layoffs (Vox cut 6% of its staff this summer).

Trends change fast, and you should reinvest your profits into BIG BUSINESS or other assets with longevity.

Dropshipping or some lucrative affiliate program won't be around in 10 years. But people will still need food and shelter. Invest accordingly.

To give a personal example, my biggest winner died out in 2019 due to Google algorithm changes. But the money I earned off it is still turning more profits in the form of dividend stocks.

If you are even a little shrewd, you can get "45 year old man money" in your mid 20's.

Also, at a certain point, assets and equity start paying for themselves.

If you collect $500,000 a year in dividends, rentals, and intellectual properties; you can have an absolutely wild time while still having an extra $100,000 or so to spare.

Additionally, own quality assets long enough and you will enjoy huge return on capital.

Classic example?

Warren Buffett holding Moody's.

Buffett's average share price was about $10, and the stock currently trades at $262.

Even crazier, it yields a dividend of $2.24 per year, meaning that Buffett doubles his initial investments every 5 years.

Source:

Again, this is why buying assets builds wealth, saving money or working nonstop does not.

Lastly, I want to mention "dark horse" investments that are risky but do provide potentially huge upside.

Crypto is the most obvious example. I hold some as a hedge, and also keep a enough in my BlockFi account (referral link with sign up bonus here blockfi.com/?ref=17d5f937 )...

To ensure that I'll enjoy meaty interest payments if BitCoin does go to $1,000,000.

While I wouldn't necessarily bet the farm on longshots or speculative trends (remember, this whole thread is just opinion), there's nothing wrong with an asymmetrical bet.

Bought at the right price, many longshots can become profitable. Even if they never reach their full potential.

And if you bet money you can afford to lose, there's very little downside.

In conclusion, you'd better figure out assets fast.

Because life gets a lot harder without them. Especially if we do see hyperinflation, massive wealth transfer, and "gig economy" expansion.

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