How to Invest Your Money Like The 1%
In this episode of the Growth Stacking Show, Dan Martell explores wealth-building strategies used by top income earners. He discusses how health and networking serve as foundations for wealth creation, explaining why high-end gym memberships can be strategic investments. Martell also shares his approach to building a network of mentors and provides guidance on how to connect with them effectively.
The episode covers practical aspects of business investment, including when to reinvest profits and how to allocate resources for growth. Martell outlines his perspective on financial diversification, touching on strategies like "buy, borrow, die" that wealthy individuals use to manage their assets, while explaining the role of traditional investments like stocks and real estate investment trusts in a comprehensive wealth strategy.
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1-Page Summary
Development and Preparation
Dan Martell emphasizes that health should be the cornerstone of any wealth-building strategy. He recommends joining an expensive gym, not just for physical benefits but as a strategic investment in both health and networking. According to Martell, these facilities connect you with success-oriented individuals, creating a motivating environment conducive to achieving your goals.
Investing In Skills and Knowledge
Martell advocates for strategic investment in personal development through coaching, courses, and books. He introduces the concept of building a "Centurion Council" - a network of 100 mentors including authors, operators, and coaches - to provide diverse knowledge and experiences. When reaching out to potential mentors, Martell recommends using the "PAC script": demonstrating Proof of applying their advice, Asking specific questions, and Closing promptly.
Investing In Business Growth
For business development, Martell suggests investing in high-quality equipment and proven strategies or "playbooks" to save time and boost efficiency. He emphasizes the importance of hiring both team members and specialized consultants to drive growth. Martell recommends allocating 20-30 percent of profits each quarter for reinvestment in areas that constrain business growth, whether that's marketing, sales, or team development.
Diversifying Into Financial Assets
While discussing financial diversification, Martell positions assets like stocks and real estate investment trusts as safety nets rather than primary wealth drivers. He explains the "buy, borrow, die" strategy used by wealthy individuals to access capital without triggering immediate taxes. Martell recommends allocating about 10% of income to long-term, tax-efficient index funds while maintaining a balanced approach that includes charitable giving and continued reinvestment in personal development.
1-Page Summary
Additional Materials
Counterarguments
- Joining an expensive gym may not be financially feasible for everyone, and there are alternative ways to maintain health and network without incurring high costs.
- The assumption that expensive gyms are filled with success-oriented individuals may not hold true for all locations and could lead to generalizations that overlook the value of diverse social and professional environments.
- The concept of a "Centurion Council" could be overwhelming and impractical for some individuals, as maintaining meaningful relationships with 100 mentors may not be feasible.
- The "PAC script" might not always be well-received by potential mentors, as some may perceive it as a transactional approach to what should be a more organic relationship.
- Investing in high-quality equipment and strategies is important, but it's also crucial to adapt and remain flexible, as sticking rigidly to certain playbooks can sometimes hinder innovation.
- Hiring specialized consultants and team members can drive growth, but it also increases overhead costs, which could be a risk for businesses with fluctuating revenues.
- Allocating a fixed percentage of profits for reinvestment does not account for the unique circumstances of each business, and a more tailored approach may be necessary.
- The "buy, borrow, die" strategy may not align with the financial planning or ethical considerations of all individuals, and it may not be applicable in all tax jurisdictions.
- Allocating 10% of income to index funds is a general guideline and may not suit everyone's financial situation or risk tolerance.
- While charitable giving is important, the balance between philanthropy and personal development can vary greatly among individuals based on their values and financial goals.
Actionables
- You can create a health-focused investment plan by setting aside a portion of your savings specifically for wellness activities that don't require a gym membership. For example, invest in a quality pair of running shoes and a fitness tracker to encourage regular exercise, or purchase a series of yoga classes at a local studio where you can meet health-minded individuals.
- Develop a personal advisory board by reaching out to professionals in your network for quarterly coffee meetups to discuss career and personal growth. Instead of aiming for 100 mentors, start with three to five individuals whose careers or lifestyles you admire, and prepare a list of targeted questions for each meetup to gain diverse insights and advice.
- Diversify your investment approach by automating a monthly contribution to a tax-efficient investment vehicle, such as a Roth IRA, if you're eligible. This allows you to consistently invest in index funds without the need to actively manage the transactions, ensuring you're building a financial safety net over time.
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Development and Preparation (Investing In Health, Fitness, Nutrition)
Dan Martell asserts that putting one’s health first is crucial, especially when aiming to build wealth, as being rich is less meaningful without good health.
Prioritize Your Health As the Foundation For Success
Investing In Health, Like a Costly Gym, Ensures Peak Condition to Pursue Ambitions
Dan Martell emphasizes that health is the foundation of success. He highlights the significance of prioritizing both mental and physical health in the pursuit of one’s goals. Martell recommends joining an expensive gym, implying that spending more on your health ensures that staying in peak condition becomes a priority. According to Martell, investing in health is a deliberate strategy to maintain the stamina and resilience needed to pursue ambitions effectively.
Surround Yourself With a Community of Like-Minded Individuals
Expensive Gyms Boost Health and Connect You With Success-Oriented People
Martell points out that expensive gyms do mo ...
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Development and Preparation (Investing In Health, Fitness, Nutrition)
Additional Materials
Counterarguments
- Expensive gyms are not the only places to maintain peak physical condition; there are cost-effective alternatives that can be just as effective.
- Wealth does not necessarily correlate with health; some individuals may prioritize health without a focus on wealth building.
- The foundation of success is subjective and may not solely rest on health for everyone; factors such as education, social connections, and innate talent can also play significant roles.
- Investing in an expensive gym membership may not be financially feasible for everyone, and it is not a prerequisite for achieving health or success.
- The assumption that expensive gyms are networking hubs could be misleading; professional networking can occur in various settings, and not all success-oriented individuals frequent expensive gyms.
- The idea that being surrounded by CEOs and entrepreneurs is universally motivating may not hold true for everyone; some may find motivation within diverse or alternative communities.
- Health is a complex concept that extends beyond phys ...
Actionables
- You can create a health accountability group with friends or colleagues to maintain motivation and share success-oriented mindsets. Start by inviting people who are also interested in improving their health and success to form a group where you meet weekly, either virtually or in person, to discuss your health goals, challenges, and achievements. This creates a support network that can offer encouragement, share resources, and hold each other accountable, similar to the community aspect found in exclusive gyms but without the high cost.
- Incorporate micro-exercises into your daily routine to improve physical health without a gym membership. Set reminders to do short bursts of physical activity, like squats, lunges, or stretching, every hour during your workday. These small actions can accumulate to a significant amount of exercise over time and can be done anywhere, helping you stay active and build stamina for your ambitions.
- Engage in skill-based volunteering to connect with ambi ...
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Investing In Skills and Knowledge
Martell actively promotes investment in one's skills and knowledge, highlighting that the purchase of courses, coaching, and books is an effective way to quickly gain expertise and strategies for success.
Upgrade Your Skills and Knowledge Through Targeted Learning
Investing In Coaching, Courses, and Books Offers Shortcuts to Success Through Expert Strategies
Martell discusses direct benefits of investing in oneself, particularly through hiring a coach, buying courses, and reading books. He emphasizes that these investments can significantly increase an individual's value and don't always require monetary investment. Martell points to free resources such as newsletters which also share valuable strategies. By tapping into condensed expertise and strategies from these sources, individuals can find effective shortcuts to success.
Build Relationships With Mentors and Influential Individuals.
Connecting With Authors, Experts, and Peers For Gratitude and Advice
Martell also talks about the influence of the book "Never Eat Alone" by Keith Ferrazzi on his approach to networking and the realization that "your network is your net worth." He believes in the power of reaching out to authors whose books have been transformative, expressing gratitude, and explaining the impact their work has made. According to Martell, this can lead to mentorship opportunities and valuable advice.
He shares personal experiences where connecting with authors and experts has led to mentorship. Martell encourages others to do the same by acknowledging the impact of ...
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Investing In Skills and Knowledge
Additional Materials
Counterarguments
- While investing in courses, coaching, and books can be beneficial, not all resources are of equal quality, and some may not provide the promised value.
- The assumption that these investments significantly increase an individual's value may not hold true for everyone, as personal growth and success are subjective and multifaceted.
- Free resources are valuable, but they may not always be as comprehensive or tailored as paid resources, potentially limiting their effectiveness.
- Shortcuts to success can be helpful, but they may also overlook the importance of the personal effort and the unique journey of learning through experience.
- Building relationships with mentors and influential individuals is important, but it should not be seen as a guaranteed path to success; intrinsic motivation and personal hard work are also critical factors.
- Reaching out to authors and experts can be beneficial, but it may not always result in mentorship opportunities, as these individuals may have limit ...
Actionables
- You can start a peer learning group to exchange skills and knowledge with others interested in similar topics. Find a local community center or library willing to host regular meetups where each member presents on something they've learned from a course, book, or free resource. This not only reinforces your own learning but also gives you access to a wider array of knowledge and experiences.
- Create a gratitude journal specifically for your professional development, noting down every piece of advice or insight you gain from any resource or individual. Regularly review your journal to remind yourself of the value you've received and consider reaching out to those who have made a significant impact to share your progress. This practice can deepen your appreciation and may encourage those who have helped you to offer further guidance.
- Develop a habit of sending personalized 'impact updates' to mentors or experts you ...
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Investing In Business Growth (Equipment, Blueprints/Playbooks, Consultants, Hiring)
Building a business requires strategic investment in tools, expertise, and people. Dan Martell highlights the different ways entrepreneurs can boost their company's growth by investing wisely.
Invest In Tools to Boost Efficiency and Productivity
Upgrading Equipment, Buying Blueprints, and Hiring Consultants to Boost Growth
Martell suggests that investing in high-quality equipment, such as phones and computers, can yield quick returns, likening it to a roofer who uses a nail gun for efficiency instead of manually nailing shingles. He underscores the value of acquiring blueprints or playbooks, as paying for proven strategies saves time compared to trial and error. He also points out that wealthy individuals regularly invest in consultants and mentorship to grow their ventures.
Martell recommends reaching out to experts through platforms like Instagram and offering to pay for their time to learn from them. He argues that spending a significant amount for an hour with the right person can lead to breakthroughs that unblock areas of personal or professional growth. Furthermore, he stresses that entrepreneurs should hire people to take tasks off their calendar, preventing them from becoming slaves to their businesses. This practice is part of the buyback principle—buying back your time by hiring others.
Empower Your Team With Essential Resources and Support
Invest In Team Development for Enhanced Performance and Innovation
Investing in team development is critical for business growth, as individuals build the business. Martell talks about hiring specialized coaches or consultants to help develop various departments. He advocates for pushing knowledge to team members doing the work. Martell shares a successful example of assisting his creative director in forming a mastermind group with other creative professionals, which helped accelerate their learning and growth.
Empowering team members with essential support enables them to innovate and perform at higher levels, which in tu ...
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Investing In Business Growth (Equipment, Blueprints/Playbooks, Consultants, Hiring)
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Counterarguments
- While investing in high-quality equipment can increase efficiency, it's important to balance cost with actual needs, as overspending on technology can strain a startup's budget.
- Acquiring blueprints or playbooks can be helpful, but they may not be universally applicable or may not align with the unique aspects of a business, potentially leading to a lack of differentiation in the market.
- Consultants and mentorship can provide valuable insights, but entrepreneurs should critically assess the advice given, as it may not always be the best fit for their specific business context.
- Reaching out to experts can be beneficial, but there is also value in building internal expertise and fostering a culture of innovation within the team.
- Hiring people to delegate tasks can free up time, but it also requires effective management skills and systems to ensure that the work is done correctly and efficiently.
- Investing in team development is crucial, but it should be done with clear objectives and measurable outcomes to ensure that it translates into business growth.
- Forming mastermind groups can be powerful, but they require a commitment to openness and sharing that not all team members may be comfortable ...
Actionables
- You can create a personal growth fund by setting aside a small percentage of your monthly income to invest in your development. Start by determining a feasible percentage, like 5-10% of your income, to put into this fund. Use it to enroll in online courses, attend workshops, or purchase books that align with your professional goals. For example, if you're aiming to improve your marketing skills, you might use this fund to take a digital marketing certification course.
- Develop a skill-swap network within your community to gain expertise without direct payment. Reach out to friends, family, or local business owners and propose an exchange of skills where you can offer your expertise in return for theirs. For instance, if you're good at web design and want to learn about financial planning, find someone in your network who needs a website and is willing to teach you about finance in return.
- Implement a 'delegation diary' to identify tasks you can ...
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Diversifying Into Financial Assets
Dan Martell frames the concept of financial asset diversification not merely as a means of becoming wealthy, but as a method to maintain and safeguard accumulated wealth.
Use Financial Assets As a Safety Net, Not Main Wealth Drivers
Martell contends that assets such as stocks in the S&P 500 or real estate investment trusts are ideal for long-term growth. However, he stresses that these investments should serve as a safety net, allowing the focus to remain on growing one's business with the knowledge that these assets will continue to compound.
Investments Offer Growth but Aren't the Main Focus for the Wealthy
Reflecting on his own experience, particularly his error in investing in real estate during a financial crisis, Martell underlines the importance of sticking to one's area of expertise. For him, investments in the form of financial assets offer a buffer and are not the central strategy for wealth creation. Martell advises taking risks primarily in one's business, utilizing any unfair advantage instead of in investment portfolios.
Leverage Assets to Access Capital Without Triggering Taxes
Martell highlights strategies leveraged by the wealthy to sidestep immediate taxes while still accessing their capital.
Strategies Like "Buy, Borrow, Die" Let the Wealthy Use Stocks As Collateral to Borrow Without Immediate Taxes
He outlines the "buy, borrow, die" strategy where individuals purchase stocks, use them as collateral to borrow funds, and upon death, use insurance policies to address the loans, thus avoiding capital gains taxes. This approach lets wealthy individuals tap into their capital without offloading their stock and triggering taxes.
Maintain a Balanced Approach To Investing Your Capital.
Martell delves into the judicious allocation of income across various facets of personal and societal development.
Income Allocation For Investments, Giving, and Development
He advises committing a portion of income—perhaps 10%—to long-term investment in tax-efficient, low-fee index funds, creating a financial bedrock. Martell also discu ...
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Diversifying Into Financial Assets
Additional Materials
Counterarguments
- While Martell emphasizes financial assets as a safety net, some financial experts argue that a more aggressive investment strategy in financial assets can be a primary wealth driver for those who lack the opportunity or skills to build a successful business.
- Martell's focus on business growth as the primary wealth creation strategy may not be applicable to everyone, especially those who do not own a business or do not have entrepreneurial aspirations.
- The "buy, borrow, die" strategy, while tax-efficient, may not be suitable for everyone due to the inherent risks of leveraging investments and the potential for changes in tax laws that could affect the strategy's effectiveness.
- Allocating a fixed percentage of income to investments and charity may not be feasible for individuals with variable income or those facing financial hardship, who may need to prioritize immediate financial stability over long-term investment or charitable giving.
- Martell's advice to reinvest in oneself and one's business is sound, but the lack of a specific percentage may leave some individuals uncertain about how much they should be ...
Actionables
- You can create a personal wealth growth chart to visualize your business growth versus passive investments. Start by plotting your current business income and project its growth over the next 5-10 years based on realistic goals. Alongside, chart the expected growth of passive investments like index funds, using historical averages as a guide. This visual tool will help you see the potential of your business as the primary wealth driver and the role of passive investments as a stabilizing factor.
- Develop a skill-enhancement savings plan by setting aside a small percentage of your monthly income into a dedicated account for personal and professional development. Use this fund to enroll in courses, attend workshops, or obtain certifications that directly enhance your business acumen or operational skills. This approach ensures you're consistently investing in yourself, which can lead to better business outcomes and personal growth.
- Establish a charitable con ...
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