Financial freedom and generational wealth is accomplished by owning assets that appreciate over time.
Real estate, business ownership, and investable public market equities are all assets with the capacity to grow in value; providing the opportunity for long-term wealth creation.
Real estate (both residential and commercial), for instance, overtime often increases in value, especially in desirable locations. A well-chosen property can yield rental income while at the same time its market value can rise.
Business ownership is another way to build wealth. Entrepreneurs who create or acquire private businesses can see substantial growth if their businesses scale.
Similarly, investing in public companies is another powerful way to build wealth, and I believe has many advantages over real estate and running a business.
Want to take advantage of the AI revolution, Crypto, or the next hyper growth opportunity? The stock market offers that, it allows virtually anyone to own a piece of high growth companies.
Some advantages of stock market investing:
- Liquidity: Stocks are bought and sold on exchanges that are tradable daily, while real estate and businesses transactions can take months to liquidate and are very costly. There are closing costs, real estate commissions, appraisal costs, etc., often times these costs are tens of thousands of dollars that come out of your profit.
- Extremely Low Entry Cost: Stock investing allows investors with minimal capital to get started, unlike real estate or starting a business which require significant upfront capital, typically tens of thousands of dollars (or more). Stock investing is unbelievably accessible to anyone. For example, Schwab now offers what’s called Stock Slices which allow investors the ability to purchase fractional shares for as little as $5.00. For $5.00 ANYONE can open an account and invest in some of the most successful companies in the world. Want to own Amazon, NVIDA, META, American Express, or JPMorgan? For the price of a Starbucks coffee, you can own a piece of the best companies in the world.
- Diversification: Public stock market investing enables portfolio diversification across sectors, industries, and geographic regions, reducing risk compared to single-property or business investments. There are thousands of investable companies that can offer unbelievable opportunities to grow your wealth.
- Time & Stress: Stock investing require substantially less stress to manage than running a business or managing real estate. Unlike a real estate investor or business owner, you’ll never get a call in the middle of the night about a pipe bursting or an employee who didn’t show up to work. As a stock owner, the management team of the companies you own will do all of the heavy lifting.
- Accessibility: Stocks are easily accessible through brokerage accounts, while real estate and businesses involve complex legal and financial processes and can take substantial time and money to get started.
- Follow the Billionaires: How do the richest people in the world invest? Look no further than the Forbes 400 list, and you’ll see the vast majority of them have their net worth tied up in publicly traded companies, many times companies they started and still hold ownership in.
The 3 keys are:
- Strategic Selection…Investing for Growth,
- Patience, and
- Time
The stock market offers the ability to invest in some of the fastest growing cutting edge companies that are run by many of the smartest people in world.
Quality assets require time to grow, as Warren Buffett has said, “the stock market is a device for transferring money from the impatient to the patient.”
-Paul R. Rossi, CFA