The Lone Wolf Investing Model
In this week’s episode, I talk about different investment models for investors who don’t necessarily have the time to be on the ground and make deals.
I also unpack the significance of choosing the right model for you based on the stage of life you’re in and how you can benefit from a community of like-minded individuals.
- the Lone Wolf model and how this is great when you’re starting out;
- the “done for you” model and how taking a back seat could be detrimental; and
- the “done with you” model and how learning from a network of investors can help you get on a track to wealth building where there’s a higher degree of certainty
00:00:00 – Intro
00:00:52 – How Wealth-Building Evolves Over Time
00:03:14 – Why the Lone Wolf Model is Challenging
00:05:23 – The Limits of the Done-For-You Model
00:08:45 – The Benefits of the Done-With-You ModelRead More
00:11:52 – The Mastermind Model
00:13:02 – Which Model is Right for You?
00:14:31 – Final Thoughts
The reality is when you start your journey creating wealth, you don’t necessarily have much money, but you have plenty of time and capacity to really study, digest and grasp all the different sources of information out thereRead More
When we’re younger, we want to consume as much as possible and make sense of the world. We want to work out what feels like it’s a fit for us and what doesn’t. And part of that might be taking on board some of the money beliefs and the worldviews that our parents or friends have and some of it is just trying things out for ourselves.
But ultimately, as we get older and as we establish ourselves as business owners, the financial responsibilities of having a family and running a household come into play. Time also becomes a more precious commodity and our ability to immerse ourselves and cut through all of the mountains of information out there, becomes harder and harder.
This is obviously a generalisation because there are some people, of all ages, who are very passionate about spending time on investing (I would probably put myself into that category). Still, I would say for the vast majority of people, life happens and wealth building, in general, becomes a background task. There’s that natural evolution.
“Do It Yourself” Investors
Let’s assume that you start your career and you have been a do it yourself investor and now you’re ready to look at other ways for two reasons:
1. maybe because time is more precious; and
2. given the world’s current state after the significant shakedown with COVID-19, there has never been a worse time in history to be trying to do it yourself.
Australia is definitely a nation passionate about investing specifically in properties and shares, and we’ve gone crazy about consuming education and information.
And because there have been so many multi-millionaires made out of property investing over the last 30 years, we’ve also got this warped worldview that property investing is very much a “do it yourself” space.
And aside from the need to go out there and get a conveyancer or a solicitor, an accountant and a lawyer; we tend to feel that we should be able to build wealth in isolation.
In my personal opinion, after having witnessed hundreds of investors over the last 20 years, the Lone Wolf Model (as I call it) is the most challenging of all approaches to wealth building.
Now, as I said, when you were a younger person, and you’ve got the luxury of time, you can go out there, you can educate yourself on how money works and how to develop excellent stewardship.
I’m definitely an advocate for that. I think it’s essential for young people to learn the ropes, understand the basics, and put themselves in a position to make good decisions later.
But I think, to be perfectly honest with you, as the average business owner evolves through their career, it becomes more and more important for them to look for better models for building wealth.
The “Done For You” Model
If they don’t want to do it themselves, the alternative model is the “done for you” model. The done for you model is effectively giving your capital to somebody else and saying “here, please go and figure this out for me.”
Inevitably, these professionals will take your money and put it into the investments that they deem best.
But the challenge is that, because we live in such a highly regulated environment right now, the decisions that the “done for you” professionals can make are limited to very conservative investments. And the challenge of course, with all of that, is that if you invest in what everyone is investing in, you’re going to get pretty poor returns or very basic returns.
I think the more significant issue I have with the “done for you model” is that you can’t abdicate your wealth-building decision making to somebody else and expect that it’ll all turn out. By default, when you abdicate, you give control to somebody else.
Philosophically, I feel that, from a wealth-building perspective and from a stewardship perspective, giving your control to somebody just doesn’t make sense.
I have spoken to so many people over the last decade (hundreds of investors in fact) who have, at some point made the decision to hand the car keys to someone that they trusted; and that has ultimately lost them wealth or just helped them tinker around the edges and stay in the same place.
So I guess what I’m saying is the model that people run to when they’re not in a position to, or don’t want to do it themselves, is this “done for you” model.
And I want to emphasise that, in some cases, the “done for you” model can be more detrimental and more harmful than merely putting your wealth on the back burner.
The “Done With You” Model
The other model to consider, which I think is probably the most empowering model, is what I call the “done with you” model.
The “done with you” model is really saying “I want to leverage the networks, the knowledge, the skills, and the insights of other people, but I want to remain in the driver’s seat of decision-making.”
I think this is the most potent model because, instead of trying to create wealth in a silo, what you’re starting to do is basically finding other people and other communities where the single focus is on finding the diamonds in the rough and navigating turbulence.
I’ve spoken to several people over the last few months who are in dire financial pain. Their businesses are suffering, and they’re barely keeping their head above water.
But even though these guys are probably high net worth individuals, they realise that if they don’t start to take charge of the assets and the wealth that they have, that they’re actually going to end up in a situation where they’re either bankrupt themselves or have to start eating the cow.
The bottom line is that there are a lot of business owners out there looking for a community of like-minded professionals who want to be in control of the decision-making, but they don’t necessarily want to go out there and do all the legwork – they don’t necessarily want to be the people on the ground who are doing the deals.
They want access to a network of A-grade investors who have access to A-grade investments and use that networked knowledge and skillset to fast track and strengthen their decision-making for every single investment that they undertake.
In Australia, for example, one of the ways that people access that kind of service is by engaging a buyer’s agent and saying, “ this is what I’m looking for, you go and do the work.”
Another example is to join meetup groups where people talk about investing. In my world, the mastermind model is the ultimate model for effectively building wealth, because not only do you get to participate in a network that has been very carefully curated and put together, but you also can look over the shoulders of what other investors are doing.
It’s about sharing experiences and sharing wisdom as a collective and really growing the knowledge and understanding inside of the community to make it a significantly safer environment than trying to go at it alone or to do deals in a particular space or strategy that maybe you’re unfamiliar with.
So the point that I’m trying to make in all of this is that you need to work out, as an investor, where you are on your journey.
If you’re someone who has a lot of time and who has the luxury of being able to make mistakes and still have time to recover, then, by all means, the “do it yourself” model is effectively where we all need to start off.
Maybe you can inquire with family and friends about the journeys that they’ve taken and use that as a way to get better results quicker.
But if you’re down that end of your life, where time is becoming an increasingly more precious commodity and where you understand that the idea of control over your investment decision making is crucial; then I would highly recommend that you stay right away from the “done for you” model and look for opportunities to experience the “done with you”.
Find communities, masterminds and groups of people who can help you step up to a higher level game and get on a track to wealth building where there’s a higher degree of certainty.
If you know business owners who are looking for a more stable, robust way of building wealth, then maybe this concept of understanding the difference between the “done with you”, the “done for you” and the “do it yourself” models could be an instrumental concept.
So please share this with anyone that you think could be looking for some support. Let’s get people thinking and behaving more as professional investors so that we can all get more significant results at an earlier stage in life to get on and do the things we want.
And finally, if you’re interested in fast-tracking towards being financially free, please check out my programs, where I help you get onto the path of generating a passive income through investing. If you’re interested, get in touch today!
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