Financial Freedom – Part 3: Maintaining and Preserving Wealth

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If you are new to reading the Money Issues blog, or have missed the last two weeks, the month of July has been committed to a five-part series offering insight on building wealth and how we can begin the process of reframing – as it pertains to the contribution(s) our environment and relationships have made to our financial foundation. This topic is being addressed over a span of five weeks in order to provide a comprehensive understanding of the fundamental approach to effect generational shifts in the process of wealth cultivation. In laymen’s terms – How to #SecureTheBag #ForTheCulture

We began with a bit of introspection in the first week, challenging our perception of wealth, and ended with an opportunity to create a financial declaration that we have the right to adopt in order to chart the way towards financial freedom. Secondly, we took a deeper dive into knowing better to do better by identifying key principles to cultivating wealth: good old-fashioned discipline and leverage. And not your momma’s typical authoritarian discipline, specifically because an authoritative style bleeds characteristics of high demand and low responsiveness. Our goal is to win, win, win no matter what (a DJ Khaled approved message) and steer clear of creating patterns of unreasonable expectations. Leveraging was a dynamic principle to unpack – and I believe that the internet gods were in my favor last week when the cover of the August issue of Forbes was released with that one keyword in the caption of America’s Women Billionaires.

So, we got our mind right. We’ve built a solid foundation based on specific principles – and “we’ve arrived”. All of this brings us to the present. What must we do in order to maintain and preserve our hard earned seat at the table?

Diversification. Let’s unpack the who, what, when, where, why and how’s of this fundamental principle.

The Who: You over there making it rain

The What: Preserving wealth requires a diversifying strategy with a long-term outlook.

The When: No time like the present, a thousand unforeseen circumstances may interrupt you at a future time.

The Where: Investments. Real Estate. Business ownership.

Some examples of this include:

Holding your growth investments in a Roth IRA – they sit there tax-free during the accumulation phase and waiting to the age of withdrawal (59 ½) means that your withdrawals won’t be taxed either. If you are a bit skeptical, just think of one service I know we’ve all used… PayPal. The founder of PayPal has sold shares of stock that will allow him to withdraw north of $95 million tax-free from his Roth IRA. I ain’t one to gossip so you ain’t heard that from me, but our pal Max Levchin is about to be paid. Benita Butrell was one of my favorite characters on “In Living Color”; I digress.

Fine art. Most wealthy investors don’t acquire art because they have a profound love for it as much as they recognize its value. This also has the ability to generate passive income as you may grow a collection that can be leased out. Hip-hop producer Swizz Beats, Beyoncé & Jay-Z often discuss how they leverage art as wealth generating assets in their portfolio.

Real estate. This is one of the better investments for generational wealth that has stood the test of time. Real estate is a great hedge against inflation, is associated with favorable tax laws, provides income, and is resistant to political and economic turmoil.

The Why: It is beyond difficult to maintain your wealth the same way you went about earning it and often times must involve reorganization and methods of sustaining with minimal unnecessary risks. Diversification reduces overall risk.

The How: Tapping into your inner entrepreneur self – Nearly all of the 1,426 billionaires amassed their wealth through an entrepreneurial spirit. Ten figure sums aren’t earned by rising through corporate ranks. Yes, I said 10 figures. I can see some of you doing the mental math right now. Where I grew up, and in many circles, six figures was – and still is – the thing to attain. And while rapper 21 Savage publicly counts from 1 to 8 M’s in his bank account, there’s still much more to strive for. Vibrate higher Keepers.

Saving. You should be saving 10% of your paycheck as a buffer for unexpected expenses and protection from your investments. This will mitigate the possibility of going into debt or having to liquidate other investments.

Planning. Without a plan in place to help your wealth grow it’s easy for it to become finite. It is important to take inventory of your skills and when necessary to engage others in the process. This includes, but is emphatically not limited to, a financial advisor, a CPA, and an attorney.

Check your emotions at the door. Fear and greed are two of the main emotional drivers of decision making that contributes to the loss of wealth.

Last but not least, Patience. Patience is a virtue. As Warren Buffet said “Successful investing takes time, discipline and patience. No matter how great the talent or effort, some things just take time: You can’t produce a baby in one month by getting nine women pregnant.” #WhereIsTheLie

Keepers, now that we’ve tackled week three take some of your downtime to jot down your personal ideas of diversification. And as always, we’d like to hear from you in the comments below.


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