20-video series #11: From bootstrapping to business ownership: it’s called capitalism...and you need capital

Welcome to my new 20-video series, on the 20 Next Level Wealth steps to designing and then living your dream life. 

The dramatic landscape changes over the past few years have created a unique opportunity for you to design and live your dream lifestyle. 

In this 20-video series, which I filmed while travelling around Europe, I've aimed to articulate everything important that I've learned about personal finance, business, wealth, and designing an ideal lifestyle...into just 20 short blog posts! 

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Capital and labour

If you spend less than you earn and invest the difference in a portfolio of assets, eventually you’ll build a solid net worth.

If you want to accelerate the process, what can you do?

You could become a specialist in your chosen profession, or work harder so that you become an executive, perhaps qualifying for a high salary and bonus.

The problem with this that you tend to pay half of the income in tax, at least in many developed countries (unless you move to, say, Singapore or Hong Kong, for example).

Better still, if you can be awarded company stock or share options, then you have the potential to gain some leverage, by become a part of owner of the business you work for.

In a capitalist economy which is comprised of capital and labour, you want to become an owner, or a deployer of capital.

Safe use of leverage

In a capitalist economy you will be rewarded for adding more value to more people.

One of the reasons that property investment is popular is that – particularly when you are in the early accumulation phase of your journey – you gain the opportunity to invest higher dollar amounts, thanks to the leverage involved.

Of course, leverage is a double-edged sword, which magnifies your gains, but also your losses.

So it needs to be used carefully.

Partly through using leverage, I’ve been able to provide high-quality rental accommodation to hundreds of tenants over the past 25 years.

To self-employment and business ownership

What about when building your own side hustle or business?

There are a few choices,

Firstly, you can self-fund your start-up, effectively hoisting yourself up by your own boot straps…known as boot-strapping.

Or you can raise money from friends, family, business connections, suppliers, or other sophisticated investors, to help speed the journey along.

Some decide to go for venture capital funding, but to be honest, I’m not really a fan.

VCs tend to be experts in providing funding on terms which suit them, but you…not so much.

You can grow a business this way, but it will be like having a stone in your shoe for the entire journey, and necessarily comes with its own challenges.

It’s extremely hard work, and not for the faint of heart.

Stock ownership

There are many ways to use leverage in the stock market, from options to margin loans and CFDs, but these aren’t recommended for most investors.

As Buffett said when discussing using leverage in stock market investing, if you’re smart you don’t need it, and if you’re dumb, you definitely shouldn’t use it.

In reality, most businesses already deploy some form of leverage, and you can participate in their growth as an investor easily and safely these days, with ETFs being a particularly popular way of doing so.

I discussed this a little further in the short video below.

Tune in here to watch it.

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Whenever you’re ready…here are 4 ways I can help you manage your own money and go next level wealth:

1. Boom or Bust in 2023 – 20 minute online workshop for investors

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If you’d like to work directly with me directly to help you map out and action your next level wealth plan… just send an email to [email protected] with the word “private”…tell me a little about your situation and what you’d like help with, and I’ll get you all the details!