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Lessons from My Favorite Moment as an Investor

Dan Zitofsky, a very successful investor, asked a group of successful investors “Tell me a story about your favorite moment as an investor.” Following was my response (with a few additions).

My favorite moment as an investor was the day I achieved financial freedom.

I knew my numbers and that particular purchase of a free and clear rental in my self-directed 401(k) put me over the top.

My definition of financial freedom has TWO components.

  1. When your PASSIVE income exceeds your ROUTINE expense.

  2. When the LIQUID PORTION OF YOUR NET WORTH exceeds your reasonably expected SPECIAL expenses through end of life.

Most people do not know their numbers for either one of these criteria. The numbers are smaller than people realize until they measure their routine expenses and estimate their special expenses through end of life.

As a result, many successful entrepreneurs, who already achieved financial freedom and don’t know it, continue to engage in activities that create enough risk that they may lose enough to have to downgrade daily happiness.

Unfortunately, I have watched this happen to people close to me during downturns. Downturns are periodic and inevitable. So, you might as well know your numbers, then protect your position once you achieve your two numbers.

Many successful entrepreneurs confuse making more money with more happiness.

I am well aware that, once achieved, I must continue to optimize and maintain SIMULTANEOUS HAPPINESS AND PROSPERITY every day for the rest of my life.

This is not hard given enough time but one must be aware in order to devise a strategic plan early enough in life to achieve simultaneous happiness and prosperity, then execute, optimize and maintain it once achieved.

Everyone gets to choose to live their lives as they see fit (in a free society like we enjoy...not in North Korea or Syria or Gaza for example). My choice is different than yours and I made my choice. You may have already made your choice and if not, now is the best time to analyze your numbers for financial freedom.

In summary, my favorite moment as an investor was the actual moment I achieved financial freedom.

By the way, on that day, that was the last rental I bought in my SD 401(k). After that I bought free and clear rentals in my SD Roth 401(k). I am optimizing the tax-free dollars per tenant in order to consolidate and minimize the number of tenants which in turn increases my happiness.

In order to maintain this aspect of the happiness/prosperity combination, choosing the right type of rentals and choosing the right tenants is crucial so that tenant management is minimized.

Strategic choices in life determine not only how well you ultimately do when it comes to happiness and prosperity, they also determine how many years/decades you get to enjoy simultaneous happiness and prosperity. You should really invest more hours per years figuring out your strategic life plan so you won’t have to invest so many years executing the inefficient pathways of that plan.

Don’t waste 1-2 decades of your life like most people do. Now invest the time and resource to purchase the Smarter Investing home study course and implement what you learn. How much is it worth to you to enjoy the remaining decades of your life instead of continuing to waste an extra decade or two? The only question that remains is how soon do you want to now enjoy your life?

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