If you want to see different results from your investments, then you can’t keep doing the same thing that everyone else is doing. Why would you model your decisions after someone whose life is not aligned with what you want?
To put it simply, your investments should be directed by your goals, and not the other way around. And for many of us, investing in the stock market is not the best or most efficient way to reach our goals.
If you’re an Accredited Investor who’s investing heavily in the stock market because you’ve been told that’s the best way to build wealth, it’s time to re-evaluate and make sure those investments are actually getting you to where you want to go. In this article, I’ll share three key reasons why you may want to start investing outside of the stock market, along with some practical tips to help you get started.
1. Minimize the Impact of Stock Market Crashes
I learned this lesson the hard way, and I try to share my story as often as I can so other people don’t have to experience it. If you’ve invested primarily in paper assets, like an IRA, a 401(k), and mutual funds, you’re hinging the success of your investments on something that is incredibly volatile and unpredictable.
I first realized this when the Dot-com bubble burst, and my investments took a large hit. At that point, I followed the advice that most financial advisors will give you: Just wait it out and keep diversifying across funds.
Following that advice, I had finally recovered my losses by 2008 — just in time for the Global Financial Crisis. I lost 33% of the value of my portfolio, and this time, I decided I never wanted to let it happen again.
I started seeking out alternative assets and learning more about strategies I hadn’t even realized existed. And in the process, I not only increased my investment success, but I also decreased my dependence on the volatile stock market. It’s a win-win situation, so why not take advantage?
2. Reduce Your Tax Burden
If you’re only investing in stocks, bonds, and mutual funds, you’re missing out on some major tax deductions.
When you invest in carbon capture technology, on the other hand, you can actually reduce the amount of tax you owe on your earned (W-2) income, while also generating consistent returns.
This is a huge benefit for Accredited Investors, whose federal tax rate is usually anywhere from 32-37%.
With carbon capture technology investments, the current U.S. Tax Code allows you to deduct at least 80% of your investment for the first year against your earned income. This type of benefit is unheard of if you’re only investing in paper assets like stocks and bonds.
3. Tailor Your Investments to Your Goals
There’s no such thing as a one-size-fits-all financial strategy, so it’s important to think critically about the assets you’re choosing to invest in. After all, if you’re investing because you want to retire early or pay for your children’s college education in the next ten years, your strategy will likely look different than if you’re investing for retirement 30 or 40 years down the road.
Once you’ve clearly identified the destination you’re hoping to reach, you can then evaluate each investment opportunity as a vehicle to help you get there. When you choose the right vehicle at the right time, you’ll reach your destination faster and more efficiently.
For me right now, that has meant investing in the energy sector in order to generate consistent cash flow along with strong tax benefits.
If you’re ready to make the change and start investing outside of the stock market, I’d love to connect with you. Fill out this form today to get in touch and learn more about how FGCPTM can help you get to where you want to go.