Investing In Freedom

Investing in Freedom Ah, yes… “the investment”.  The word alone strikes promise, fear, greed… when a financial investment goes bad, we are said to feel “pain”. Best Paid …

Investing in Freedom

Ah, yes… “the investment”.  The word alone strikes promise, fear, greed… when a financial investment goes bad, we are said to feel “pain”.

Best Paid People On Earth

We are at the point in our society where “investment bankers” are the best paid people on earth.  Indeed, our entire global economic system depends on their profitability.  Should the investment bankers do something stupid and fail, we the taxpayers must buy their profitability by bailing out their industry with trillions of dollars.  If that is not enough, we must lend them money for free (as much as they need), and insure them against default – all for our own good.

Brainwashed

At the heart of this dilemma is a society that has been brainwashed into believing that we should “invest” our extra money with somebody else – as though we ourselves are not qualified to make our own investment decisions.

Let’s look at some of the financial investments you might consider, and why your best option is to invest in your own freedom.

Mutual Funds – The most common form of investment for people who don’t know what else to do with their money.  In this scheme, money is handed over to a well dressed, well educated “professional” whose job is to grow the value of your money.

Mutual fund investors don’t seem to mind the fact that most mutual funds under perform the indexes they are invested in – especially after you subtract all of their fees.  This chart shows the percentage of General Equity Funds that were outperformed by the S.& P.’s 500 Index 1963 – June 30, 1998:

The chart above shows that most of the time, a monkey could invest just as well as a mutual fund manager if given just two choices “Dow Jones” or “S & P 500″. Hey, we all have friends who are mutual fund managers and we mean no disrespect… it’s not their fault they chose an easy occupation.  Blaming them is like blaming a blackjack dealer for your losses at the casino.

What botheres me about mutual funds is that the mutual fund manager gets paid whether or not my money grows.  Not only that, the expected returns are rather paltry given the amount of risk.   A mutual fund manager will show you historical models that indicate an expected return of 5% – 7% depending on the level of risk you are willing to take – before taxes.

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Woweee!

OK, let me get this straight.  So if you hand over $10,000 to a mutual fund, I stand to make maybe $500 per year ($40 per month) before fees and taxes – IF (and that’s a big IF) there is no financial crisis, recession, economic calamity, inflation, deflation, or other unforeseen circumstance in the meantime.  You could make that kind of money simply by reducing your Starbucks intake, or by by trimming your Internet connection speed from “super fast” to just “fast”.   Next investment option please!

Hedge Funds – Most hedge funds require minimum investments of $200,000 or more.  They use risky techniques to try to beat the indexes. Their people are even more highly trained and they wear even more expensive suits than their cousins – the mutual fund managers.  Once again, hedge fund managers win whether or not you win, although they usually get a bonus if they win big.  $200,000 is a lot of money.  Perhaps if you have a few hundred million kicking around and you could stand to lose a few hundred grand, you would give these guys a go just for the fun of it.  Until then, next investment option please!

Trade Your Own Funds – Your next option would be to educate yourself on the merits of each stock, bond, ETF, PowerFund, SuperFund, Emerging Market Fund, Forex, Commodity, Futures, Option, Put, Call, and every other form of complicated investment security and trading style.

Initially in favor of this option, I began spending hours everyday watching and learning everything I could about how to take control of my own investments.  I almost opened my first brokerage account in the summer of 2008 right before the markets crashed.  Luckily I didn’t.  After the markets tanked, I started to think twice about opening a brokerage account and trading my own investment securities!  Next option please!

Real Estate – Unless you plan to live in it, don’t buy it.  Having bought, rented and sold several properties over the years, I’ve learned a lot about real estate investing.  By the time you pay for maintenance, repairs, insurance, property management, leasing fees, real estate commissions, closing costs, vacancy, troubled tenants, mortgage and bank related fees, and property taxes, many real estate investments can turn out to be a headache, an expense (ie. negative returns), or both.

One should always keep ones eyes out for great real estate deals, because you make your money on real estate when you buy, not when you sell.  At any rate, the days of easy money in real estate are gone.  Sure you can get some great bargains right now in certain markets in the US, but trying to get financing if it is not your primary residence is extremely difficult.  And after paying the costs of management and eventual re-sale expenses, you should not expect real estate to do much better than a mutual fund, and real estate offers far less liquidity.  Next option please!

Timber – Here’s a winner.  Trees get 10% to 15% bigger every year, regardless of what happens in the economy.  Trees never complain, and they cost very little to maintain.  Forests are shrinking, and wood will always be useful and in demand from a growing, global population.  Plus you are invested in the land that grows the trees and they eat up that nasty carbon dioxide.  The key here is finding a good forest management company.  The problem with a timber investment is you don’t receive any cash flow to pay living expenses while your trees grow.  Timber is a good place to story capital but not a good way to earn cash flow to pay bills or re-invest elsewhere.

Freedom
– Finally the biggest winner of all. So far, freedom will capture the lion’s share of my extra money.  I decided the most important investment I could make was to create my own sustainable business – a business that did not depend on the performance of the global economy.  But I wanted more than that.  I wanted a business I could do from anywhere, so I could travel, live and work wherever I choose, create my own hours, and get a rate of return that was directly influenced by my own efforts and energy.  I wanted a business and an investment that depends on me, not a mutual fund manager with a cushy salary and no incentive to perform.

Freedom Is Worth The Risk

I realized that creating and building my own business was the best investment I could make.  Sure, I could lose my money like any other investment, but if I was successful, I’d be free.  To me, freedom is worth much more than a 10% return on my money, freedom is priceless.  Freedom is worth the risk.

I see people working their 9-5 jobs and investing all of their surplus money into mutual funds while they struggle to pay their credit card balance at 18% interest.   What they should really do is invest in their own freedom by creating their own business.

Now That’s Freedom!

Thankfully for me, this investment in my own business has paid off big time – I now work and live where I choose and have plenty of income to live comfortably.  I have no commute, no suits or ties, no office and no boss – I call it my Business In A Briefcase.  Instead of a paltry $500 per year return on my investment, I make more money working 8 hours per week than most people make working 8 hours per day, and I do it from wherever I want.  Now that’s freedom!

Work From A Laptop Overlooking The Ocean

Today’s business world is not the same as it was 10 or even 5 years ago.  The internet and other mobile business tools have enabled some of us to break the chains of 9-5 and do our work from a lap top overlooking the ocean or in a coffee shop in Italy, or wherever.  In addition, the small business person has access to entire globe of consumers – we are no longer limited to the passers-by on the street where our business is physically located.

Yes, this CAN be your new office window!

Mission For 2010

Now my mission is to help others create their own business and invest in their own freedom. This is why, with the help of some of my advisers, we have created “Business In A Briefcase” – an International Business Training Course where we teach others how to do what we’ve done.  Here is the Business In A Briefcase Course Outline.

How To Invest In Your Own Freedom

Starting and running your own business is not as easy as it sounds.  It requires some skill and expertise but mostly it requires education and tools.  If you were planning to build a house for the first time, wouldn’t you first want to learn from someone who has built a house, and learn how to use the right tools?  When you go to cook a new meal, do you not first consult the recipe, and ensure you have the right tools with which to cook?

Meanwhile, I see people spending $75,000 to get an MBA that does not guarantee them job security.  So here’s an investment idea, try out our Business In A Briefcase International Business Training Course for $399.  It might be the best investment you ever made.

Michael Manville

About The Author

Michael Manville has been interviewed by the New York Times and Newsweek Magazine for his comments about living and doing business overseas.  He’s traveled to over 35 countries worldwide, lived in four countries, and speaks fluent Spanish.  He teaches Business In A Briefcase and operates Retire Worldwide, an international lifestyle membership club.

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