Episode #298 — What, exactly, is a self-directed investor? Well my friends, it’s as much philosophy as technique; as much about wisdom of means as it is success of the ends. It’s all about trusting YOURSELF more than you trust Wall Street, Big Banks or anyone else who has their eye on your investment capital. Find out right now if you REALLY are a self-directed investor… and what that means for you. I’m Bryan Ellis. This is Episode #298.
Hello, Self-Directed Investor Nation. Welcome to the broadcast of record for savvy self-directed investors like you, where in each episode, I help you to find, understand and PROFIT from exceptional alternative investment opportunities!
Today’s show is sponsored by the Self-Directed Investor Society, America’s premier association for affluent investors using self-directed IRA’s, 401k’s and other tax-slashing power tools. To learn more, visit SelfDirected.org.
Back in the mid-90’s, I was running a software consultancy and was doing very well. I was young… in my mid 20’s… and things were looking good. But at some point, I read that famous book called Rich Dad, Poor Dad… and you know, that did something to me.
If you’re not familiar, Rich Dad, Poor Dad is a book by a guy named Robert Kiyosaki, who published the book as non-fiction, but has since come far, far short of verifying anything he claims therein.
Nevertheless, the message of the book – that there’s wisdom in building assets that produce cash flow – is a very strong starting point for making very good investment decisions. That particular book is highly real estate-centric in it’s asset-class focus, and this worked well for me because I grew up with a father and grandfather who, while not investors, were in the real estate development and contracting business, so real estate felt like a very short leap for me.
So it’s a few years later, and I’ve started to put some money away for retirement, but what I really want to do is step away from software development and focus on real estate investing. But even though I was doing well business-wise, I still didn’t have the kind of capital that was necessary to really make a go of real estate, so I did what any stubbornly independent-minded person would do: I learned every creative investing strategy possible for acquiring real estate without capital.
There’s definitely a place for that, and I’m certainly not sorry I learned all of those strategies, and I’m actually downright grateful for the opportunity that that gave me to learn how to think creatively to solve financial challenges. But here’s some harsh reality:
If you want to do REALLY well in real estate, you’ve got to have access to capital, whether yours or someone else’s. But access is key.
And so when I was attending a real estate investing seminar, I heard about this thing called a self-directed IRA. I’d never heard of it before, and from what I could tell, it gave me a way to access the money in my retirement account in order to begin doing more and bigger real estate deals.
Now let’s just ignore the fact that I didn’t yet understand that all money inside of an IRA must be used to build up the IRA itself, and not to build up the owner of the IRA directly. I ultimately figured that out, hehehe, but didn’t start with that understanding.
But to me, the self-directed IRA thing was a total game-changer… in a HUGE way. It let me access a pool of capital for making the kinds of investments that I UNDERSTOOD… the kinds of investments that I WANTED TO MAKE… not the kinds of investments that were being forced on me by some nameless, faceless financial company.
And that, my friends, is really the crux of the self-directed investor philosophy. It’s a deep-seated belief in the superiority of one’s own knowledge, experience and instincts over conventional wisdom. It’s a belief that just because THEY do it that way doesn’t mean that *I* have to do it that way. It’s a realization of the clear reality that there’s something called CONFLICT OF INTEREST in this world, and that where Wall Street’s financial products are concerned, that that conflict always works out in the interest of Wall Street before it works out in the interest of the customer. It’s also a realization that conflict of interest isn’t inherently bad, it simply is, and sometimes, by taking real control of our circumstances, that we can sometimes craft that conflict into something that is beneficial – maybe even extraordinarily beneficial – for us.
For some, self-directed investing is about using every single drop of potential flexibility provided by the law to create overwhelmingly ninja-level type results that are nothing short of jaw-dropping.
To others, self-directed investing is a way to diversify AWAY from stocks… not because stocks aren’t profitable lately, but because even on the very best day, you have exactly zero control or influence over them.
But to me, self-directed investing is one thing: FREEDOM. The ability to make my own choices. To work as hard as I want to work and to dig in and find the very best, most life-changing opportunities you can imagine. But also the freedom to work VERY LITTLE… to let others who are the best at what they do take a center-stage role in building wealth in a way that isn’t otherwise available to me.
It’s freedom, folks. It’s freedom. The principle that drives the booming growth of the self-directed investor movement is the same principle that made America great the first time… and that is FREEDOM.
And that, my friends, is what it means to be a self-directed investor. I welcome your thoughts and feedback by email at [email protected] or on today’s show page at SDITalk.com/298.
Folks, invest wisely today, and live well forever!