If I had learned that distinction earlier in my investing career, I would have done things very differently and chosen a more direct route than the 20 years it took me to get here. (Fortunately, I started young enough for that to be recoverable.) The purpose of my articles, speaking engagements, website and videos is to share what I’ve learned in order to save you the time that it took me to figure it out the hard way.
Now, I could end this article right here if achieving financial freedom were as simple as telling you to opt out of the costs of living while maintaining your current standard of living. Unfortunately, it’s not that simple. But I’ve discovered that it’s also very easy to achieve once you know what to look for and where to find it.
Freedom versus self-reliance
What is ‘financial freedom’ anyway? The key factor that separates true financial freedom from garden-variety financial self-reliance (i.e. having a job) is whether or not you achieve the cash flow needed to pay your bills with little to no ongoing time or work required. Think of it this way:
If you want to achieve financial freedom, always ask these two questions of every potential investment: “What is the regular cash flow income?” and “What is the return on my time?”
Return on my time’ [ROMT] is not often discussed as an investment criteria, so how can you determine the time input an investment will require? Every investment model will be different, and the time input also depends on how involved you intend to be with each investment, so there is no way to know for certain at the outset. But you can get a rough idea by looking at the following four areas that I’ve identified. Inside each are clues as to the anticipated ROMT of the investment model and whether it will bog you down or set you free.
Many hands make for light work, so ask yourself if the investment model has an established framework of professional supporting teams, such as real estate agents, rental managers, mortgage brokers for placing private mortgages, and mortgage administrators for collecting your payments and enforcing defaults. Team-based investment models free up your time immensely because you share the workload.
Rules define what you’re doing, guide your decisions and tell you whether an investment is ‘in play’ or ‘out of bounds.’ A good set of rules will filter out the bad investments and leave you just a few good options to choose from, saving you a huge amount of time.
Systems are about repeatability. They save you an astronomical amount of time by turning success into a near rubber-stamp process of what works, as long as you adapt it to the ever-changing market as you go. Systems guide you and your team step-bystep in following your rules so that you’re not just making it up as you go.
How much work will the investment model require from you? Will you be involved in the day-to-day activity, only the high-level management decisions, or will your team handle everything and simply report back to you?
After looking at any investment model with regard to these four criteria, you’ll be closer to determining whether your net time investment will yield a positive ROMT (freeing up your time) or negative ROMT (tying up your time).
While there may be other passive cash-flow models, it took me 20 years of investing to discover that professionally screened and administered private mortgages offer both the reliable double-digit monthly cash flow that can pay my bills both today and in the future, along with the simplicity of a set-and forget investment, thanks to a licensed mortgage administration team that handles all of the issues for me.
Michael Anger is a mortgage agent and account manager with Paramount Equity Financial Corporation. FSCO LIC: Administrator 11747; Brokerage 12158 855-4-MONEY-4U (855-466-6394) firstname.lastname@example.org paramountequity.ca/am/MichaelAnger Michael’s private mortgage blog:
That’s right – investing isn’t about money. It’s about time. Specifically, investing is about having options for how and where you spend your time. For all that money and investing are made out to be, I see them as nothing more than the means to a greater enjoyment of your time.