When we work for someone else, we are paid only when our services enrich our employer and its investors. This is the universal truth driving all employment worldwide.
Life should be about adding value to others. However, protecting our interests and preparing for the “rainy day” are equally important. There is nothing wrong with working for others; however, we need to build a money cushion so that it works for us when we cannot work for it!
After about 25 years of experimentation, I have put principles of the BCG growth matrix and good poker player strategies to outline below a framework that may work for you.
Primer 1: BCG 4 product life cycle stages move from Question Mark to Star to Cash Cow to Dog. Companies use their current cash cow to identify and create future ones.
Primer 2: Texas Hold’em Poker bets start with small and big blinds, then increase based on the win outlook.
While employed, I used my salary and free time after work as a cash cow to invest in multiple ideas that appeared to be Stars. Nine out of ten initiatives failed, taking many of my small and big blinds. However, each initiative made me wiser, increased my network, and opened up other better opportunities.
The 10th initiative was a home run (from a two-unit property purchase bet to 100s under management and ownership).
After the 2008 crash, I started following Blackstone’s real estate investments and invested in two townhouses in 2013. As a poor low-level employee, I could only afford $100,000 then. So, I bought foreclosed properties with pesky issues and numerous city violations.
After renovations, those two townhouses seeded the down payment for two 6-unit buildings. The two 6-units urged me to go for the third 6-unit. After appreciation, each 6-unit supported the purchase of two 20-unit buildings. The 1031 exchange tax clause in real estate allows investors to transfer tax-free gains to sell and buy more significant portfolio properties simultaneously.
With the collaboration of other like-minded investors, I refinanced existing investments to buy an additional 40-unit complex, then another 27 units, and then another 83-unit complex. We kept buying distressed properties, turned them around, and sometimes operationalized units used as storage by previous landlords.
That same two-unit bet became so promising that I invested fully in it, using my 401 (k), all other stock exits, and full-time involvement, not to mention the employee base supporting this venture. I couldn’t have guessed that this bet would become so lucrative.
Early on, the transition from early six-figure to mid-eight-figure wealth was complex and uncertain. However, the wealth generation framework outlined here is still repeatable.
Keep testing the waters with small bets, using a cash cow that works for you. If you work hard enough and are patiently optimistic, you will find your Star.
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