The #1 Thing Successful Investors Do

Foreign. Hello, everyone, and welcome to the Common Sense Financial Podcast. I'm your host, Brian Scribonia. Today I'm going to be sharing with you the number one thing that most successful investors are doing with their money that the average investor isn't even thinking about. One of the mantras around my house is nothing changes. If nothing changes, it's just a reminder to not complain about an outcome or a circumstance, but to try to find a solution. Typically, it takes nothing more than a simple shift in mindset or a behavior or attitude change that makes the difference and leads to a more favorable outcome. Now, for you, you might be at a place where you're feeling stuck or confused about what your next move should be, or maybe you're thinking that there's more, that maybe there's just something you're missing that's a problem. And instead of rolling this around in your head over and over again and focusing on the symptoms of your situation, right now is the time to start thinking differently about money. And this podcast could very well be your gateway into learning what that something is. As I share what successful investors are doing differently and how they grow their wealth, by the end of this podcast, you're going to know how to think and make decisions like the top 1%, how to take control of your money and create passive income, and how to effectively and confidently build wealth. There's no better time in history than right now to learn what the wealthiest investors are doing to do this. And you have the opportunity to use this information to grow wealth for yourself. The truth is that the wealthiest investors in the world, they keep getting wealthier not because they're lucky or privileged. They're getting wealthier because they are playing a different game than the average investor. They do not rely on 401ks, average rates of return and stock performance to find security for themselves. Their attitude about money is completely different. What they focus on is entirely different. And how they invest their money is completely different. While the average investor is spinning their wheels, following the herd and their search for financial freedom, and ultimately being discouraged with the results, the wealthy are reaching new levels of wealth and financial independence. Why is that? What I have found is that the average investor has been promised if they fund their retirement accounts, accelerate the payoff of their home store money in the bank, that security will follow. But this advice has proven over and over again to fall short of producing the results they were promised. Markets go up, then the profits go away. With the mention of a world conflict, a terrorist attack, a deadly virus, or some other circumstance outside of our control, causing the pursuit of financial freedom to be delayed or even lost. A commitment of resources to rapidly pay down debt becomes tunnel vision to only find that the need for money never stops. Home repairs, college tuition, automobile purchases, it all competes for the same resources. Putting pressure on retirement and your future goals. And storing cash in the bank promises security by having easy access to cash, but only proves to be a burden because you're knowing that nothing's being done to grow money for the future. Yet this is how the majority of people handle their money, and it's leading them all to the same place. It's a place of frustration, disappointment and disillusion. What follows is a search for something better. A better investment, a lower rate of return on loans, a higher earning on a bank account. But it all is more of the same. It's the idea of doing something that doesn't work with the belief that if you just work a little harder than maybe it'll work. It's an illusion. The average person following this approach, they find themselves relying and hoping for things outside of their control to bring them happiness, success and financial freedom. This is most evident when there are extremes happening in the market that are either good or bad. When markets are good, greed sets in and there's. There's euphoria, optimism and hope. It spurs a belief and eagerness that more growth is coming that is entirely based on things and events outside of their control. It's equivalent to a gambler's rush. When markets are bad, fear sets in and there is anxiety, pessimism and hopelessness. It spurs a belief that more losses are coming and leaves them with a sense of uncertainty about what will happen next. All again based entirely on things and events. I outside of their control. This is what I call a spectator approach to money, which means that you're just watching to see what happens next and are simply along for the ride with no control over the outcome. There is a better approach to this, and to learn what that is, all you have to do is turn to those who are already getting the results you're looking for and duplicate what they're doing successfully. At the end of this podcast, I'm going to offer you an opportunity to not only be given the strategies that the top 1% are using to grow and protect their wealth, I'm actually going to help you do it. Through my proprietary Build wealth system. You will receive a collection of over 25 years of my experience working knee to knee with successful people distilling everything down for you in five steps. You will Learn details for how to build a financial strategy that mirrors what other successful people are already doing right now to grow and protect their wealth. There are certain things the wealthiest people think and do that make them rise above the status quo to accomplish financial freedom. Status. And it's not luck in the market that makes someone successful. It is the information that the wealthiest people have and what they do with that information that creates the result. That is why a successful person can become wealthy, lose it all, then recreate the wealth again. While a lottery winner can be lucky and receive millions, they have no ability to replicate their wealth again. The point is this. It's not luck that creates wealth. It is information. And what you do with that information that creates the wealth. The wealthy follow a system, a roadmap of sorts for creating income that supplies their financial freedom. Isn't that what we're all seeking? All we have to do is look to Yale's Endowment for a glimpse into what one of the world's top investors do to grow wealth. With billions under management, their goal is to consistently produce income that is used to fund their school's operation. They strive for consistent growth with a focus on avoiding losses, using proven strategies to control the outcome. All with only 17% in the stock market. Now, you may be asking, why would you compare yourself to a multi billion dollar endowment? And the answer is this because your goal is similar to what most investors are trying to accomplish and that is to create income. And to do that, these investors are not leaving their goals for income to chance by relying solely on market volatility in their search for yield. The problem is that we find the average investor allocating nearly 100% of their money in the stock market with no strategy other than they hear about double digit averages and are like gamblers going all in pursuit of promised riches. But if this is the best strategy, then why does one of the world's largest and most successful investors, that's Yale's Endowment, why do they not see it the same way? And I contend that there are two reasons for this. And here they are on a bumper sticker. Number one, they understand that an average rate of return is nothing more than math trickery and has little to do, if anything, to do with actual gains in the portfolio. And number two, they understand that diversification is more than picking a few mutual funds. The difference is this wealthy investors focus on real rates of return, while the average investor tends to focus on average rates of return. Now, on the surface, these may both seem like the same thing, perhaps even a game of semantics. But there's a difference, and it's one of those little bits of information that successful people know and understand. The attraction of a double digit average is appealing to those who don't understand the difference between these two forms of returns and is why you need to pay attention to this little bit of information to learn its importance. An average rate of return is a problem at so many levels. But here's a simple example to consider. If you have $100 and you lose 50%, you have $50. If you then make 100% rate of return, you have $100, the average is 25%, but you have no profit. What an average neglects to reflect is in the computation is what it takes to recoup a loss from one year to the next. If you lose 10%, it takes 11% to get back to break even. If you lose 30%, it takes 43% to get back to break even. If you lose half of your money, that means you have to double it to get back to where you started from. So a 50% loss requires 100% gain just to be made whole. If you recall back In December of 2018, the market went down double digits. Then when the calendar flipped in 2019, the market went up up double digits. The headlines all touted the double digit gains for the year, when in fact the year over year there was absolutely no growth. The real return through this up and down market movement was zero. The wealthy know and understand this misleading math and they focus their attention on consistency over peaks and valleys. Their focus leans towards minimizing losses and controlling the outcome. This is one of the key differences that is keeping the average investor from experiencing the growth and the freedom that they're seeking. The second is how the average investor approaches diversification. Asset allocation, diversification, risk management are all based on philosophies for how to spread out risk. The average investor tends to rely on mutual funds for allocating their money in their portfolio and ignore most everything else. They buy a growth fund or two, an international fund, maybe a target date fund, using average rates of return as a filter for which to choose. Now, it shouldn't surprise you at this point to learn that the most successful investors are doing things differently. The range of products they use is much broader and they don't rely on any one type. And they certainly don't use averages of past performance to dictate their choices. Portfolio diversification goes beyond the stock market and includes such things as alternative investments, annuities, life insurance that can be used to formulate a robust portfolio that is designed to level the valleys of the stock market and grow wealth through income and consistency. The number one thing large investors like Yale realize that the average investor doesn't seem to be thinking about is that financial freedom security success is not determined solely on how much money you have. Rather, it's a measurement of how much income is generated from the assets that you have. There's a difference. And the key to understanding this is being clear on why investors invest in the first place. You have to realize that there are certain things the wealthiest people think about and do that make them rise above the status quo, achieve that financial freedom status. The entire idea around saving and investing money is based on one thing, and that one thing is consistent income. That's it. Yale focuses on having income generated from its assets to fund its operation. Ultimately, your financial freedom is rooted in having your investments generate income to support your financial lifestyle. That in and of itself is the key difference between how most successful investors think versus how the average person thinks. You have to ask yourself, if income is the key to having financial freedom, then why is there not a greater focus on creating income producing assets? It is what I have found to be the key and it is why I believe that endowments have the right, have this right and individual investors have it wrong. Endowments are focused on income from their investments to lessen their dependency on their tuition. I see many people work hard, they have good paying jobs, they invest in their retirement plans at work, yet they feel strapped and never seem to get ahead. The average investor is more focused on simply growing their investments while they rely on their ability to work to generate income. It's a completely backwards situation. If the average investor would begin to think like the endowments, think they could generate income from their investments and ultimately be able to rely less on the need to work to create income. That is the mindset needed to reach a point of being financially free. Having your income satisfied through your assets, leaving you free to focus on other more meaningful things with your life here on earth. The mistake many investors make that prevent them from from this from happening is the belief that their 401k or bank account is their security or their goal. People often express goals and dollar amounts right? They say, I want a million dollars by age 60, for instance. Okay, you have a million dollars. But what does that mean? We don't accumulate money to simply have a stack of $100 bills. We accumulate money to use it. And how do we use it? It's through income, remember? For the average investor, the mindset revolves around the growth of their money, when in fact the goal should be to create an income strategy just like the endowments. Now, some would argue that if you have a million dollars, then you have money to spend. Then they simply take from the stack of $100 bills. The problem with this idea of taking from your stack of money is that you have to continuously replenish your stack to prevent from running out of hundred dollar bills. Using this approach leaves you having to either work to earn money or living on hope that the stock market will produce positive returns that exceeds what you're using. What the endowments have figured out is that rather than spending the stack of $100 bills, they just focus on having those hundred dollar bills create income to spend. If you create income from your stack of $100 bills, what you're doing is you're hanging on to your money and living off the income your money is generating. Imagine having assets that produce income for you to use and spend, releasing you from having to work to generate an income. That's financial independence. The focus has got to be on creating income. Now the other point to understand when it comes to creating income is the need for consistency. This is where having too much risk in the stock market puts your income at risk and why the idea of using the stock market to replace your spending. A dangerous game. Volatility and income are not two words you want together when it comes to income. You want to hear consistency of income. Again, this is where the endowments have it right by having less exposure to the stock market. Endowments focus on income producing strategies with the goal of achieving consistency to fund their budget needs. In my 25 years of experience, I've worked with thousands of business owners, families and individuals and have distilled down the five steps that separate the wealthy from the average in my proprietary Build wealth system. The Build wealth system is designed to help you build and protect your wealth so you can invest your time, money and energy into what brings you the most joy in life. Whether that's your next business venture or traveling the world with your family. The system was designed in a way that you no longer have to jump from one idea to another with hopes of finding the next best strategy or struggling to find the right professionals to assist you. With a dedicated wealth team, you can be coached on how to take immediate control control of your financial situation and have your money in 100% alignment with goals in five steps. Step one is to get clarity. We'll dive into what's most important to you and help you understand how your money is currently flowing and deduct any holes where you may be leaking cash. We'll align your cash flow and resources with your goals so you can focus on what matters most to you in your life, like retiring early, traveling, spending time with your family and doing the things you love. Step two is identifying roadblocks. We'll take inventory of your current financial picture and examine which resources you have that are propelling you towards your goal and which ones are holding you back so you can regain control of them to ensure money is available when you need it. And step number three is building a foundation. We'll solidify the foundational pillars to make sure your financial plan is strong from multiple angles. And this includes developing a private banking system designed to help reduce dependency on banks. Step number four is mirroring success. Success leaves clues and there are key principles the top 1% use to manage their wealth and build their balance sheet. We'll come up with your custom plan using proper diversification and set formulas that mirror how the wealthy invest. Our wealth team supports you each step of the way so you can be confident that you're building a future proof plan that will impact your current and future generations to come. And step number five is mapping the progress. Our concierge team will be here for you each step of the way to help you focus on your plan, evaluate your progress, avoid potential pitfalls and make the necessary adjustments to keep you on track and moving towards your biggest goals and your dreams. We built this system to help successful business owners and individuals learn and incorporate the information and the systems the wealthiest investors use to grow and protect their wealth. Now it's your turn. If you're not already working with my team, this is your opportunity to not only learn the strategies that the top 1% are using to grow and protect their wealth, but you'll have a dedicated team of professionals helping you bring it all together. We will share the details for how to build a financial strategy that mirrors what other successful people have already done to grow and protect their wealth. Making a shift in your portfolio towards an income generating strategy can be easy if you allow for a few tweaks in your thinking. Here are the do's and don'ts you can do right now to shift towards an income generating portfolio. Don't be greedy with unreasonable expectations. Rather realize and focus on what can be be controlled. Historically, markets have barely produced real returns of 5%. This is a far cry from the average we hear touted of 10% or more. Yes you could. You can have good years, but we're talking about long term dependency on assets which requires consistency to work. Lean into this reality and you will discover that there's a much bigger picture and a pathway towards true freedom. The others don't measure success by account balance. Rather focus on on focus on income from your assets. Remembering that the goal of the most successful investors is to have their assets generating enough income to spend and support their cash flow needs. Since income is the goal, then having a laser focused strategy on income using the amount of income being generated as your measuring stick for success is what you need to do. Strive to increase the income from your assets over rate of return. Don't put your money in jail, rather have money available when you need it. One of the worst things you can do when income is your focus is to contribute money into retirement accounts. When your focus is on creating income, this type of account is bad news and may not be in alignment with your goals. When money gets trapped in these accounts, you have no ability to remove money from the account unless you're over 59 and a half. Which leads me to the next point. Don't voluntarily give up control of your money. Rather be diligent about moving money into your control. Too often people get stuck with bank payments, high tax payments, retirement account balances, low yielding savings accounts. We have found that 60% or more of the average person's cash flow and assets are outside of their control. It's essential in your quest for financial independence to reduce dependency on banks and keep your money allocated in a way that enables you to control the outcome. And lastly, don't waste time and money trying to do this on your own. Rather receive one on one coaching from a team of professionals. Each day that passes is one less day. You have to experience the true freedom that comes from having your assets generating income to fund your lifestyle. The most successful investors and entrepreneurs are doing things differently and is the reason they are called the top 1%. They aren't following the herd. They aren't relying on chance for their security. They are reliant on strategy, not luck. They are doing things differently than everybody else. Right now you have an opportunity to not only learn the strategies that the top 1% are using to grow and protect their wealth, you can actually have my team do it for you. I have spent nearly three decades researching and learning what the most successful business owners and investors are doing to get the results. We built this system to help successful business owners and individuals learn and incorporate the information and systems the wealthiest investors use to grow and and protect their wealth. You can learn more about how you can qualify to be part of this system on my website at www.brian scribonia.com consultation. There you will find all the details about how the system works, qualifications and steps to get started. If you're not already following me on Facebook, Twitter, YouTube, Instagram and LinkedIn, and if you're not already subscribed to our Forbes Top 10 rated podcast that you're listening to right now, the Common Sense Financial Podcast. Take time to do that right now. That concludes today's podcast. I'm Brian Scribonia. Thanks for listening to the Common Sense Financial Podcast, RA.