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Shafer Financial Philosophy? July 22, 2008

Posted by shaferfinancial in Uncategorized.
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Its been a while since I have outlined my philosophy, so I thought I would go over it for new readers.  I am a refugee from the standard financial planning community, undoing its damage to my personal finances, as well as offering an alternative opportunity to building wealth.

I practice what I call evidence based financial planning, a hyper-dose of reality for most people.  Not willing to cheerlead failure, I constantly research what works and what fails with wealth building.  This is not to say that any particular strategy couldn’t work for somebody, but figure the odds are against most folks in general, so why apply strategies that the masses of folks (I call the herd) have failed at over the last couple generations?  I eschew all those “retirement calculators” that require crazy assumptions like monthly inputs for decades and a never ending time horizon.  Having said this, I don’t believe you can get “rich quick,” but the get “rich slow” crowd also gets it wrong. 

Here is a quick hit list for what my research found out:

1.  You must have an in depth plan;

2. You must change what you are doing now;

3. You must want to become rich, not average, but rich;

4. Your mind is the most important financial tool you have;

5. It is not easy, simple or automatic; and

6. Copy what the rich do, not what the average or even mass affluent do.

If you internalize those six points, and operationalize them, you will become rich.

Now here is the final point, ironically our society is designed to get people to do the exact opposite of the above six points.  Our society, through the use of schools, creates mass consumers, with their independent thought processes disabled.  Fortunately, this can be a temporary situation.  I will give you one example of this in action.  Most people understand that only a few people become independently wealthy, in other words capable of living off of their finances without being employed or helped by the government.  Knowing that the vast majority of people fail at this basic task, people continue to do the exact same things the majority of people did to fail, just because that is what they are told to do by the mass media.  This is how the schools work; substitute the masses of people for the students,  the mass media for the all knowing teachers, and Wall Street agents for the school bureaucrats (administrators) and you have the system for financial planning.  It is designed to be self-serving, just like the schools.

Here is what I found out about creating wealth:

1.  You need to get double digit returns in order to build it and that requires learning to invest yourself, not be dependent on others who will suck the returns away from you;

2. You need to use leverage, either financial, labor or value leverage;

3. You need to either own or be a primary investor in a small business where you can apply labor leverage and/or value leverage (this can be concurrent with being an employee);

4. You need to learn to legally avoid taxes, the biggest drain on your finances; and perhaps most importantly

5. You need to change the way you think about yourself developing the thought patterns of the wealthy.

Hopefully, everything I post is about one of those five items.  I know the Shafer Wealth Academy adheres to those points.

I also point out that everything I suggest above, I personally do.  I blame that for my ever increasing net worth.

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Comments»

1. investmentblogger - July 22, 2008

A great explanation of how people in our society has been herded into voluntary slavery without knowing it. Everything you mention is true, everything you suggest works!

2. Artur | Phoenix Real Estate - July 24, 2008

I always believed that money does grow on trees in the states. It’s only a matter of selecting the right tools and knowing how to use them to pick the fruit.

3. shaferfinancial - July 24, 2008

I don’t use that metaphor, but agree with the sentiment. Of course, one of the big issues is the army of stock sales people out there. They call themselves financial planners, CFP’s, etc., but they all end up selling mutual funds for the bulk of their advice. This tidal wave of propaganda is hard to get out from under. I said it before, but anytime one of these financial experts suggests a mutual fund, ask them why not Berkshire Hathaway B’s? Watch them back pedal and find excuses. Ask them to create a chart with BRKB and whatever mutual fund they suggest overlayed over each other for 10 or 20 years!


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