Welcome back kids! I hope everyone is doing well and staying safe. Today, we have an interesting topic – Money Trees. Yes, you read that correctly – Money Trees. We are all taught that there are no such things as money trees, and people who believe in it are full of it. What if I told you that money trees actually exist? Well, figuratively, not literally, but that’s beside the point… The wealthy individuals in this world know that these types of things exist, and this is why they are able to reap the benefits of it. Mr. Nahas, what do you mean but figuratively and not literally a money tree? The money tree I’m talking about is Investing; this is your money tree, and I’ll explain how below. Buckle up and enjoy the ride!
Preparing to Plant the Tree
Before you are able to plant a regular tree, you have to know how to plant it and prepare to plant it. What I mean by this is you have to get mentally prepared to take care of the tree and then you have to know the theory, the process, and the steps to plant a tree. Planting a money tree (investing) is no different, you need to mentally prepare to take this journey because you need patience, positivity, mental will, and dedication. After this, you will then need to get as much information as you can on the type of money tree you want to plant (stocks, bonds, real estate, businesses, etc.) by watching videos, readings books, reading blogs (hint hint, cough cough), and just any material you can get on the subject. It’s important to have a good grasp of the information on the tree you want to plant and know the ins and outs of it. The special thing about money trees is that you are able to mix and match. What I mean by this is that you are able to take seeds (money) from one type of money tree (i.e. stocks) and use it to plant (invest) in another type of money tree (i.e. real estate). You can then take the two seeds of the previous trees (investments) and plant (invest) it in another type of tree (investment). This is the beauty of it.
Gathering the Seeds
After you have thoroughly prepared to plant the money tree (invest), you need your initial seed (money). Obtaining your initial seed might be the hardest thing to do, but it is a necessary evil. I don’t care how you do this (make sure it is legal of course) but get your hands on the initial seed, and it will be easier to obtain the second and third. Having a day job is probably the most common way people get this seed, having a side hustle that provides you income will greatly help! If you have to sell rocks, garbage bags, lemonade, whatever you have to do, get your hands on your initial seed (money). Once you have your hands on the seed, the fun begins.
Picking the Tree
Once you have the necessary knowledge about planting trees, knowledge of different types of trees, and the initial seed, it’s time to pick the type of tree (investment) carefully. Whether it’s index funds, real estate, small business, etc. Whatever it is, you must make sure that you understand the risks associated with the tree and the benefits of the tree. Index funds are more passive but subject to the market while small businesses and real estate investments tend to be more hands on and requires more effort and depends on consumers. It all depends on how much work you want to put in to growing and maintaining your tree. No matter what, choose carefully and make sure you understand everything about it.
Digging the Hole
Once you have completed the previous three steps, it’s time to plant the tree…. kind of. Mr. Nahas, what do you mean by kind of? Well, I want to mention that you need to find the place you want to plant the tree. Essentially, “digging the hole” in other words, find the place to plant your money tree. What I mean by this is to find the actual investment. If you chose real estate as your money tree, you need to find the property. If you chose index funds, you need to choose the index fund you want to invest in. This is the time where you actually choose the specific investment and find all the details about it. For real estate investments, that means searching for properties, valuing them, walking through them, getting your team together (I will go over real estate specifically in another post), completing the closing process, and becoming a landlord (if applicable). For small businesses, what is your business about? What goods and services will you be providing? Is there a market for it? There are many more questions you will need to ask yourself, but the overall concept in this case is to get specific about where and how you will be “digging your hole” as this is one of the most important things. You can’t invest in real estate where no one will want to live, or you can’t open up a gas station where there are already so many around you.
Planting the Tree
Now it’s time to plant your money tree! Whether it’s buying your first property and closing or successfully investing in index funds, you have officially planted the money tree. Actually, planting your first tree will be a rush of emotions from excitement to anxiety, it will be a rollercoaster ride but that’s okay! There will be ups and downs throughout the process, but you can handle it! When a problem arises, take a step back and evaluate the situation without emotions and find solutions. Ask yourself “how can this be solved effectively and efficiently” as well as “what is the best path to fix the problem at hand”. You should remember that for every problem, there is a solution.
Multiplying the Tree into Trees
This is probably when the real fun begins. Once you have one money tree, planting a second money tree will be easier because you can get seeds (money) from two sources now, the day job and your first money tree; this accelerates the time it takes you to get enough of seeds to plant the second. After the second, the third will be easier and the fourth will be easier than the third. Taking the seeds that you get from your previous money trees, you plant new money trees that bring you more seeds. It’s a cycle, and this is how you build a forest of money trees that constantly provides you will seed. Make sure you replant the seeds from the other money trees into new money trees and don’t eat the seeds (spend the money). Essentially, you are using the money that you get from your investments and reinvesting them into another money maker, whether it’s more money in index funds or more properties; the important part is that you reinvest them so you can grow more, don’t spend the money but rather put them into another investment that makes more money.
So hopefully I proved to you that money trees actually exist, kind of… This is an important part of personal finance and building wealth, something that the rich realized. Having multiple income streams and reinvesting profits from one investment into another investment that provides you more money is the key to building wealth. At some point, instead of growing at a linear rate, you grow exponentially. Just keep repeating the steps above and eventually, you will have a forest of money trees that constantly provide you with seeds. This will take so much pressure off you because you know that you are financially secure. Let’s say you only have one income stream and that’s it. If you lose that income, you will be stressed and struggling. The more income streams you have flowing, the more financially secure you are. If you have 8 streams of constant income and one goes out, you still have 7 left. I hope that I have provided you with valuable information kids. Take care and stay safe!
P.S. What personal finance topics would you like me to talk about?