Gary Holt Blog

Investing for retirement; Where do I go?

Posted by gary holt on Mon, Nov, 26, 2012 @ 09:11 AM

Every day I visit with owners who are part of the "baby boomer" generation. In fact, I am one of them myself.  I see it over and over again, the owners want to retire and ask me for the best place for investing for their retirement years. Often they are very surprised with my answer. I ask them "Have you considered investing in your own business?" After the blank stare, I typically get the same response, "But I said I want to retire!" 

My definition of retirement is much different than most definitions. I see it as investing money into a product that generates money over and over again. I call this the "Perpetual Money Machine," in fact, I wrote a book about it.  I don't recommend that people get out of business. Instead, I recommend that they invest money into their business so that the business continually provides for them for years to come. 

"But isn't that risky?" they will often ask.

Risk is a perception and I further illustrate that by defining existing investments. 

Do you have real estate investments? "Yes." "How are your real estate investments?" Often they comment, "The values are down 30-50% and I can't get anyone interested in buying at that price." 

So, I review. "You have money investing in real estate. But there is no way to get money out of it besides borrowing against it and even if you do borrow, you don't know what value will be placed on the real estate itself? Is that correct?" "Yes," again is the typical response. I then ask, "Isn't that risky? An investment where you can't get to your money?"

Then I ask about stocks. "Do you have any stocks or mutual funds and how are they performing?" The most common response is a look of disgust and the proclamation that "we really lost money there." I again ask, "Isn't that risky?"

My comments may come across as shrewd to some, but it is my job to look at problems from an objective viewpoint and ask questions. 

I then inquire as to how long before they are interested in retiring but I already know the answer. I know the answer because if it is less than 30 years they don't have the time for their portfolio to build and I know that they wouldn't be talking to me if they had 30 years to go. 

So what does all of this prove? It simply proves that ALL investments are risky and the perception of risk is often skewed by common misperceptions. When you break it down, like the dialogue above, the client realizes that real estate and stocks are very risky. So is being in business, even though they never equated the risk to their existing businesses.

This leads us back to the beginning of this article. My recommendations are to re-invest in their business and create a "Perpetual Money Machine" to provide for the client and their families for years to come. To create the "Perpetual Money Machine" takes commitment, time and money. 

I have made a section of one of the chapters in my book available for you to review.  Chapter 4 discusses "Making More Money by Investing in Your Own Business."  In my next post I will discuss further just what I mean by investing in your own business.  In the meantime, if you are interesting in learning even more about the concept of investing in your own business the entire 17 chapters are available at our online store.

How do you perceive risk?

Topics: Investing for retirement