A look at how commercial real estate wealth is gained over time, and an investigation of the age-old relationship between wealth and happiness.
Several months ago, we reintroduced a series of posts on what we call the Wealth Cycle, a three-phase investment journey that begins with wealth creation, moves on to wealth preservation and ends with a plan for wealth distribution.
In the first phase, we work to create wealth through hard work and savvy investing that is often associated with taking greater risk.
In the second phase, we become more focused on preserving our growing nest egg, while we continue to increase the size of our portfolios, but with a decreasing appetite for risk, as we realize that we may not have time enough to recover if we get out over our skis.
In the third phase, we have what we need to live our lifestyle of our own choosing, but concentrate on developing a sound strategic plan for distributing the fruits of our labor to our heirs.
We don’t necessarily jump from one phase to another. It’s a matter of changing our emphasis over time to make sure that we build wealth without taking unnecessary risks that can result in the unraveling of what we worked so hard to acquire. And, while all this is happening, we live the ups and downs of daily living, raise families, pursue our passions and achieve both business and personal life goals.One of the biggest challenges in life is to maintain balance between our business and personal lives. Click To Tweet
For many, the two are intertwined, as personal interests and talents, combined with hard work, become our source of wealth creation. Those who do best at striking this balance are more likely to live happier and more fulfilling lives.
Most of us know a few multi-millionaires who are miserable and a few others of limited means who are happy and content. Being rich is no happiness guarantee, but being poor is not a choice most of us would make in terms of pursuing happiness.
Many of you, our clients and friends, have been extraordinarily successful in life, and we are grateful and honored to have had the opportunity to work with you and learn from you through the years. In return, we hope that you value us in the same way.
Today, we want to explore a question that the answer to we think is essential: when is more just more and at what point does accumulating wealth lose value in terms of living a fulfilling life?
When we begin a career, we have no idea what the outcome will be. Some success paths ascend in a linear fashion, but most don’t. Challenges, interruptions, distractions and the hazards of daily living tend to interrupt us.
Sometimes we fail altogether and have to pick ourselves off the dirt, dust ourselves off and find our way on a new path. From each of our failures and wrong turns, we learn. Think about how many times Thomas Edison failed to make a functioning light bulb. Once he did, the world changed and he became one of the most famous inventors of his time. Even so, his bet on DC current was a failure, and AC current prevailed. Think Beta vs VHS.
So, now that you are well on your way, what will you do with the rest of your life? What will you do with your money, your ideas, your interests and your passions? How much will you need to follow a path that will take you where you want to go? Do you even know where it is you want to go?
Though these questions are not real estate specific and we are just real estate guys, we think your answers to these questions should figure into your decision-making matrix as it relates to your real estate holdings.
So, we ask you to put some thought to these questions, and then take a high-altitude look at what you already have in terms of personal wealth, current income and also your liabilities.
Then, without considering the tax consequences of disposing of any of your assets, ask yourself if deploying your capital differently could make a difference in the quality of your life. Why do we say not to consider taxes?
Because actions in your best interests not taken re-define the concept of the tail wagging the dog. It’s an exercise that won’t cost you a penny and it can be done anywhere; on your way to or from work, in your Sunday driver on your way to breakfast, or just sitting in front of the TV watching your favorite sport. If it brings up anything we can help with, just give us a call.
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