September 3, 2022

JF2921: The Secret to Investing Is Simple, But Not Easy

Passive Investor Tips is a weekly series hosted by full-time passive investor and Best Ever Show host, Travis Watts. In each bite-sized episode, Travis breaks down passive investor topics, simplifying the philosophy and mindset while providing tactical, valuable information on how to be a passive investor.

In this episode, Travis expands on his famous saying: “It’s simple, but it’s not easy.” He explains how most passive investors begin their journey with a modest investment that might not seem impressive at first, but it’s important to keep in mind that it’s only the beginning. The journey takes time, patience, and self-discipline. 

While it is simple to invest, Travis stresses that real estate, in most cases, is not a way to get rich quickly. It’s a wealth-building strategy. However, once you study the fundamentals, get the right education, and lay out your roadmap, it will simply be a matter of time before you reach your financial goals.



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Travis Watts: Welcome back, Best Ever listeners, to another episode of Passive Investor Tips. I'm your host, Travis Watts, and in this episode we are talking about the secret to investing. Disclaimers, as always, not financial advice. This is for educational and informational purposes only. So in the last episode, what we were talking about is why your first million is so hard, and the psychology behind it. We talked about mastering the fundamentals. I shared with you guys a couple stories there. And in this episode, we're talking about my old, famous saying that it's simple, but not easy.

So let me break it down for you. The name of the show is Passive Investor Tips. It's a 100-episode series on those looking to be more hands-off in real estate, not having to trade your time for money, not having to settle with a 40-hour workweek and three weeks of vacation. It's about building a purposeful and meaningful lifestyle that suits you best. And you know, that's the end goal for a lot of people, but the reality is that it doesn't have to take 40 years to get there. And the secret that I'm referring to is that it's simple, but not easy. Here's what I mean.

So most of us on the passive investing journey are going to start with something pretty modest. Let's say that you go out and you invest $15,000 that you saved up over the course of a year or whatever it may be for you, and you go put that into a passive income producing asset. And let's say the yield on that asset is 8% annualized. Well, that gives you $100 a month. Now, on the surface $100/month may not be too impressive, you may not see the big picture just getting started, but keep in mind, that's only the beginning.

If you were to continue this strategy, that means that the next year and you're number two, you would only have to invest from new capital $13,800, because you would have had $1,200 throughout the first year in distributions. So it gets easier and easier as you go year to year. So it's actually quite simple, on paper, if you choose to play the game at that level. Now, that's only one strategy, and one approach; you may choose to do it differently and have different dollar amounts and have different investment yields, etc. But the key is that you have to start. The reality is that the journey takes patience, it takes time and it takes self discipline, and this is where a lot of people fall short. In fact, if you look at the statistics of lottery winners, just to use one example, two to five years after their windfall, they're completely broke. 78% of NFL players are broke after just three years of retirement. And I love this quote by Albert Einstein, he says "Everything should be made as simple as possible, but no simpler." And that's my goal with the show, it's to take complex concepts and strategies and formulas and things that a lot of people overcomplicate and to simply break it down into steps for you in a five to seven minute episode, so I hope you find value in that.

So the simple part is actually the investing. It's not hard to imagine you saving a little bit of money, and investing that in something that produces passive income, and just rinsing and repeating that process throughout a lifetime. It's the mental part that's the hard part. I'm sure you've heard this said in one way or another, that it's 80% mental and 20% physical; that holds true in this scenario. Again, it takes time and patience, and most people are very impatient. Everybody wants the six-pack abs in 30 days, everyone wants to lose their 50 pounds in three months, but if you allocate proper timeframes, you will get there.

Break: [00:05:02.23]

Travis Watts: Real estate, in most cases, is not a get-rich-quick, it's a get rich slow. It's a true wealth-building strategy. In fact, the average millionaire takes 12 to 20 years to acquire their first million. So once you study the fundamentals, and once you get the education and you get your roadmap laid out, it's just a matter of time. Let me paint a quick analogy for you. Some of you listening may know that I just became a father about eight months ago, and I'll tell you, there's a lot of parallels between raising a child and investing your money.

In the beginning, it's a lot of work to raise a baby or to learn how to invest; it takes a lot of your time. At the toddler stage, you still have to watch it, but you get a little bit of a break. Then the maturity stage, we'll say teenager - pretty self-sufficient, could go out on their own for a day or two, but you still can't take your eye off the ball. And the real benefit is if you're able to wait long enough, that investment, that baby can begin taking care of you when you're older.

Funny story, I just got back from a real estate event that was hosted in Tampa, Florida, and I got to mingle with hundreds of different investors, mostly active folks. And what was funny is most people there, I would say, were looking to cut the curve as much as possible. I wouldn't go as far as to say "get rich quick", but I would say jump into the highest-yielding investments, start flipping homes, become a general partner of a syndication next week, in hopes of raising millions of dollars. This was the funny thing - not one of them had any fundamental plan for actually building passive income or long-term wealth. It seemed to be all short-sighted, it seemed to all be about what are you going to do in 2022 to get your income up.

And you guys, I'm a huge advocate for being active in what you love and enjoy doing, so there's nothing wrong with flipping homes or being a general partner. I'm not saying everybody needs to be a passive investor. But why not start building some passive income along the way?

To go back to my previous analogy with a baby - what happens if you feed a baby too much? Do they develop twice as fast? If you 10x the amount of calories that you give a baby, are they going to develop 10 times faster? No. Obviously. It takes time, it takes patience, it is a journey, and something that we need to respect. It is simple, not easy.

And as always, thank you guys so much for being Best Ever listeners. This is just key fundamental information. There's a 100 episodes series at the end of it; it's something you can refer back to. It's something that you can pick out the topics that are most meaningful to you right now, in your passive income journey. If we haven't connected on social, @passiveinvestortips on Instagram and Facebook, or Travis Watts on Bigger Pockets, LinkedIn. I'm happy to be a resource for you or anyone you think could find value in these episodes. Have a Best Ever week and we'll see you on the next episode of Passive Investor Tips.

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