Let’s look at “Plan B” investments, and why I call them that.
When your focus is on your active income (trading time for dollars), it’s your single, primary source of income – Plan A.
Most people, especially just starting out, get their education, and then trade time for dollars at whatever level the marketplace is paying. The problem is, the vast majority continue to rely on that single source of income throughout their life. So when things happen (illness, changing family situation, recession, pandemic, etc.) their single source of income is no longer as viable – if viable at all.
Plan B income means: Sources of income built outside of your primary source.
My goal in life was always to transition from being the worker bee in my practice, to having enough capital assets outside of the business so that my income wasn’t dependent on me going into work every day. When my daughter, Jenna, was very sick and needed a liver transplant by age 12, I was able to leave my practice because I had enough capital assets producing predictable, sustainable cash flow.
Cash flow is the name of the game.
If your model has been the financial marketplace, with advisors telling you to do the 401(k), cash balance, and defined benefits plans, you’ve just been following the majority. It’s a herd mentality and I’m not faulting you for it.
But right now you should be seeing that it’s a bad model because it doesn’t produce what you really need. The 401(k) is an accumulation model, and yes, it can go up in value with the market, but when the market tanks every 8-10 years, you’re back down and starting over. And in some cycles, it can take another 6-8 years to bring the valuation back up.
I’ve ridden through numerous recession market cycles since I started investing in Real Estate in 1980. I’ve gone through downturns and seen cash flows remain steady in my alternative investments, when everything else was falling apart. In 2008, after going through a failed practice sale, I was okay because my alternative investments were producing the cash flow I needed. I had Plan B income.
Even in this downturn, 98% of my tenant income (rentals), and principal and interest payments on houses that I sold and carried back financing for, have come in. People need a roof over their heads and they will do what it takes to keep it.
If you’ve tried buying rental properties and hated it, look, you just didn’t know what you didn’t know. That’s not an efficient model to do on your own. And that’s not how we do it at Freedom Founders.
We bring together the best operations managers who provide the financing, syndicators who bring in the best opportunities in multifamily, self-storage, and mobile home properties, and fund managers that give us diversification in many different sectors.
You’ve got to find the right people. You’ll make more mistakes, hit the worst timing, and won’t have the efficiency of good management if you try to do it yourself. That’s why I built Freedom Founders. And we’re looking forward to the opportunities coming in the next 6-24 months, where we’ll hit this inflection curve – what I call the great wealth transfer.
Wealth doesn’t disappear. It changes hands every market cycle. You can multiply your net worth in these downturns – and they only come every so often. So you’ve got to be willing to change your mindset.
What are you going to do differently this time? Who are you? Do you follow the herd, or are you willing to carve your own path?
To your freedom!
P.S. If you have over $1.5M (can include equity/practice sale) and would like the chance to speak with me directly, book a 10 minute call with my assistant Alex here.
1. Ready to Step Away?
“How Much is Enough?” This simple question keeps hard-working professionals at the hamster wheel of active income far longer than they need to be. Watch this free training, and discover a proven model for determining how much you really need before hanging up the handpiece! www.freedomfounders.com/training
2. Get Your Free Retirement Scorecard:
Benchmark your retirement and wealth-building against hundreds of other practice professionals, and get personalized feedback on your biggest opportunities and leverage points. Go to www.FreedomFounders.com/Scorecard to take the 3 minute assessment and get your scorecard.
3. Apply To Visit The Mastermind:
If you’d like to join dozens of dentists, docs, and practice professionals on the fast track to Freedom (3-5 years or less), visit www.freedomfounders.com/step-1 to apply for a guest seat.
4. Want to Work Directly with Me?
If you’d like to work directly with me and a small group of my closest investment colleagues, with direct access to the dealmakers and asset classes that I invest in, just send a message to firstname.lastname@example.org, and put “Fast Access” in the subject line. Or, call (972) 203-6960 Ext 141 and leave a brief voicemail for Alex. Let him know you’re interested in the Fast Access program – we’ll set up a time with you to talk, find out about your goals, and see if there is a fit.