You’ll Burn Your Money If You Try to Earn It like Warren Buffet
Instead, monetize like a badass internet farmer from Vermont
I’m not proud about it but when auditing financial records my team use to laugh at people wanting to get rich trusting compound interests alone.
It’s not that we enjoyed knowing why they would fail.
It’s just that they lacked financial education. But that’s understandable because our education system is bad when it comes to money.
We’re taught ridiculous money advice and then we spend our youth and best years to earn it.
You have to get away from the idea that compound interests alone can make you wealthy.
There is a faster way to think about making money and free you from the stress of waiting 40 years for the compound interests to work while you become a walking wrinkle.
It’s Not about You Investing Today And Waiting
You can start investing today and wait 10 years for the Fary Godmother compound interest to work her magic and turn you into a wealthy princess, glass slippers included, right?
After all, it sounds reasonable, a decade it’s a long time considering world life expectancy is roughly between 7 and 8 decades. It means if we invest and wait for 1 of our valuable 7 decades we’ll become millionaires. Right? Of course not.
As I write Warren Buffet’s net worth is $117.6 billion.
Warren Buffet began serious investing when he was 11 years old.
The mind-blowing fact according to Morgan Housel in his book The Psychology of Money is that he accumulated $117.3 billion after his 50th birthday. And $114.6 billion after his mid-60s. (Amounts of the book updated using current Warren Buffet’s net worth.)
It’s hard to grasp the idea that 99.7% of Warren Buffet’s net worth was accumulated after the forces of compounding had worked for 40 years. And 97.45% of his net worth accumulated after his 65th birthday.
House explains that if Warren Buffet had started investing at age 30 and quit investing at 60 his actual net worth would be 99.9% less.
Warren Buffet’s age is 91. Thus, one of Warren Buffet’s secrets it’s time.
It’s Not Only about Start Investing Young
I don’t know about you, but I’m not so confident about beating Warren Buffet’s 91 years long life and counting.
But that’s not the troublesome part.
The practical obstacles are those the money gurus don’t tell you are necessary to make compounding work.
They don’t even write it in small letters.
Every money guru will tell you about the magic of compound interest and proceed to explain how dumb everybody is for not realizing such an easy way of getting rich.
Of course, they’ll also explain that it’s not your fault but the system that wants you poor.
This guru’s secret is so well guarded that I watched a guy explaining it while dancing in a TikTok challenge. Using a ventriloquist dummy.
Most gurus don’t dance but charge from $5,000 to $10,000 to explain this in a seminar. Too much for not dancing. For that kind of money, I want them to dance the Macarena and Oppa Gangnam Style.
It’s about Yourself Knowing How Compounding Earns Money and Burns It
For compounding to work for you, not against you, use this checklist to help you understand if compounding is the right strategy for you to approach earning money.
Decades of time
Warren Buffet has been an incredible investor for more than three-quarters of a century. He didn’t sell in panic his assets in the 15 recessions he’s survived, he allowed them to compound for years and years.
Investing skills
Warren Buffet’s well-known strategy is value investing.
What he does is to profit by buying stocks at discounted prices when the market overreacts to good or bad news lowering the stock prices of companies he thinks have a higher value in the long term. Easier said than done.
Capital/savings
By 1956 Buffet went back to Omaha from New York, he considered himself retired at 26 years old with $175,000.
Then he started an investment fund where family and friends trusted him with $105,000, or $1 million adjusted for inflation.
Frugality
Being prudent when spending and wise avoiding waste, lavishness, or extravagance isn’t easy, more if you have lots of money.
Warren Buffett still lives in the same home he purchased in 1958 for $31,500 in Omaha, Nebraska.
Continuously avoiding screwing-up
Oh, the irony. What makes you earn money also makes you lose it.
Making money requires taking risks, but keeping it, requires fear. Like in nature, enough fear keeps you alive, too much risk-taking keeps you under the earth.
Thus, the biggest difference in your wealth is your ability to stick around for a long time without screwing up your gains trying to gain more.
Your past gains need years and years to start compounding, and it will never happen if you don’t survive the unpredictable crashes of the economy and the many recessions to come.
Instead, Earn Money like a Badass Internet Farmer From Vermont
Let’s say I don’t have decades of time to wait. Also, let’s assume while fairly resourceful I don’t have advanced investing skills.
Besides, God knows I don’t have the $105,000 Warren Buffet started his fund with ($1 million in today’s money).
On top, I don’t feel like a fervent practitioner of frugality, and to be fair I can’t avoid screwing up once in a while.
What to do?
Before the farmer, Robert Kiyosaki, author of Rich Dad Poor Dad
While you can find Kiyosaki’s ideas about making compound interest work using the velocity of money no one has ever proven his Rich Dad who taught him everything about getting rich ever existed.
Based on that information we can assume he made his fortune selling his book, and to this day his estimated net worth is $100 million.
Monetize like a badass internet farmer
Like a Farmer?!
Good Morgan is a charismatic cool guy who owns the Gold Shaw Farm in Vermont, you can follow his adventures with Pablo Barn Cat and Toby Guard Dog on his Youtube channel and Facebook.
What I like about this guy is how he enjoys life and earns money with intangibles.
He monetizes his daily farm chores like feeding cattle, collecting eggs, and defending from hound hunters on his farm. The genius part is that he has to do those things anyway.
Heck, he’s even considering launching his farm’s NFT collection.
So far Morgan has been able to invest in buying his own tractor, cattle, and fencing, which are by no means cheap.
Some people estimate his annual earnings after Youtube’s 45% cut are somewhere in between $100K and 150K.
His fans against the NFT idea go as far as telling him to don’t do that and just start a Patreon account so they can support him.
At the End of The Day
We all come from different situations, we’re walking different paths of life with their respective hurdles. What works for many, won’t work for you, and what works for you, won’t work for many.
If you already have plenty of money in your bank account is a different situation than someone trying to earn money to build her personal wealth.
Different situations, different needs.
Keeping your wealth
In the first case, not screwing up is a priority because your mind will be bombarded with stories of turning millions into billions. Many people will try to make you feel dumb for all the opportunities you’re missing.
They’ll tell you how if they had your money they would make so much out of it.
But only one person knows how sharp your investing skills are, how frugal you live, and how you look into the future at your age. That person is you.
Building your wealth
In the second case, if you’re trying to build your wealth you surely are working very hard and a lot of things seem unfair sometimes.
It’s not your imagination, building wealth is hard. Making a lot with little is your focus.
But in your head, you’ve got a universe of intangible things waiting for you to summon them in this world.
Become the creator of your wealth
What many people don’t understand when they talk about compounding is that you have needs right now, bills to pay at the end of the month.
And the millions you could earn in the distant future investing money you don’t have is as useful for you as a fishing rod is to a Salmon.
Thus, creating products straight out of your mind is like knowing how to swim after you’re placed in the middle of a lake and you want to reach the beach where everybody is partying.
Intangibles are faster than compounding because they’re mostly pure profit transferred directly from the consumer you’re helping to your pocket, without decades of waiting to see if you picked the right investment opportunity, where you risked the money you had to earn the money you could have.
The math is simple, profit is what remains after deducting all costs. And so happens the main ingredient of your creations is you.
Why you?
You, because you’re a beautiful mix of many intangible things. Your worldview, experiences, your joys, and your sufferings for God’s sake. All comes together to be your mental fingerprint.
No One in the whole world has your mental fingerprint.
Then the faster way to think about making money is for you to understand that you can create unique, beautiful, and helpful products from the intangibles in your mind waiting for you to command them into improving people’s life. Because…
Because you’re a unique pattern of intangible things.
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Note: The information contained in this story is subject to change and doesn't constitute legal or financial advice. Always consult a financial planner or a tax advisor for detailed information.
