Todd Polke breaks down five phases of wealth building: foundation, acquisitions, consolidation, and beyond. He emphasizes raising financial IQ, building systems, accumulating assets and income streams, then deleveraging to secure cash flow and protect what you've built.
What I want to talk to you guys about is all about how to utilize and access your equity and how you use your equity to supercharge your portfolio. Now, I actually ran a Facebook Live in this Wealth Dojo group on this similar type of topic quite recently. But some of you saw it, some of you did not. And I wanted to make sure that I'm doing this with you guys as well because this is such a critical element when it comes to growing a portfolio. So first things first, when it comes to growing your portfolio, we want to zoom out. We want to see a bit of the bigger picture, what happens when it comes to growing our portfolio. And because the reason I'm saying is one mistake I see a lot of investors make is that they try and do everything at once. Oh, they want to grow their wealth, they want to pay down debt, they want to increase their cash flow, they want to do this, and they want to do everything at once. And what they wind up happening is they have these opposing forces butting heads like this, and they, um, don't wind up getting traction in a certain arena within their portfolio itself. Where what I want you guys to get into your philosophies when it comes to investing is what you need to focus on certain stages within your portfolio. Now, there are 5 phases when it comes to growing your wealth portfolio. Phase number 1 is all about building a deep and a strong foundation. Yep. When we're talking about building a deep and strong foundation, I'm talking about raising your financial IQ, which is what we're doing together every single week, right? It's installing a personal finance system. It's starting to shift your psychology to turn on what I call your millionaire mode. and it's to establish your peer group, right? The big challenge here is a lot of people are very unorganized with their finances, and the only time they ever get to their money is when there's tax time, when there's a bill to pay, when there's emergency, or when it's too late. That's when most people tend to get to their money, and they wonder why they're not on top of their finances. The big mistake I see a lot of people make here is that they've spent 10, 15, 20 years, 30 years of their life getting themselves into their financial situation they're in right now, and then they expect it to change overnight. And so they go chasing shiny objects or get-rich-quick strategies or things like that, and they, um, they give into their excuses, right? They buy more into their excuses than they do into their result. Now, I'm not going to spend any more time on that. It's just more of establishing understanding. We need the foundation. We then move into our acquisitions phase. So in the acquisitions phase, our focus is on accumulating assets, accumulating income streams, and accumulating your 6-star team around you, right? That's what the focus needs to be. Notice that debt reduction is not a big part of that focus at this stage. Now, everyone's situation is going to be a little bit different. Okay, but these are the general phases. Our focus is not on mass debt reduction at this phase unless you have a lot of personal debt which, which needs to be solved as part of your foundation. But our focus is not on massive elimination of investment debt if you're in your acquisition phase at this juncture. Doesn't mean that we don't at certain phases and that we don't have a continual process to eliminate debt bit by bit, but it's not a big area of focus. The big challenge people have is they have no strategy, and the big mistake is that there's random in what they're doing. They're trying to do everything at once. The consolidation phase is when we want to start deleveraging the portfolio. This is where we're going to really begin to rapidly pay down debt within the portfolio itself. Okay, not in the acquisition phase. It's where we move into the consolidation phase. So this is where we want to secure our cash flow. So we want to increase the cash flow coming in from our portfolio. We want to start to upgrade our protection mechanisms so we can protect our portfolio more and protect our future. The big challenge here is a weak system, and the big mistake is a lack of forward planning. What I've seen a lot of people do is that they go headfirst into acquisition phase, and all they're thinking about is the acquisition phase. They're not planning for how they're going to transition over here, or transition over here. And they've just been buying some stuff over here, but there's been no real system or strategy behind it around how what you're doing now is going to really help you get to financial freedom in the future. And so for you guys that are more starting out in the beginning phase of your portfolio or midway through, what I want you to be thinking about is how every element that you add into a portfolio has to be serving a purpose. Not that's going to— not just going to allow you to go from one deal to another deal to another deal in the short term, But medium term, you wanna be thinking about how you're gonna be able to shift into different phases, but also how what you're doing here is gonna help you create your freedom and create your legacy later on.
