{"id":10459,"date":"2024-01-07T23:36:09","date_gmt":"2024-01-07T23:36:09","guid":{"rendered":"https:\/\/imsfund.com\/?p=10459"},"modified":"2024-01-07T23:36:09","modified_gmt":"2024-01-07T23:36:09","slug":"5-ways-you-can-get-rich-without-investing-in-real-estate","status":"publish","type":"post","link":"https:\/\/imsfund.com\/index.php\/2024\/01\/07\/5-ways-you-can-get-rich-without-investing-in-real-estate\/","title":{"rendered":"5 Ways You Can Get Rich WITHOUT Investing in Real Estate"},"content":{"rendered":"<p> <br \/>\n<\/p>\n<div :class=\"{ 'hidden': $store.proContent.showFullPrompt() }\">\n<section class=\"px-4 relative border border-slate-200 mobile-toc lg:hidden\" x-data=\"{open:false}\">\n<button x-on:click=\"open = !open\" class=\"flex items-center gap-4 my-2 border-none w-full\"><br \/>\n<svg xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"h-6 w-6\" fill=\"none\" viewbox=\"0 0 24 24\" stroke=\"currentColor\" stroke-width=\"2\"><path stroke-linecap=\"round\" stroke-linejoin=\"round\" d=\"M4 8h16M4 16h16\"\/><\/svg><\/p>\n<p class=\"font-semibold text-slate-800 text-base m-0 js-toc-ignore\">In this article<\/p>\n<p><\/button><\/p>\n<\/section>\n<p><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/how-to-build-wealth-with-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Investing in real estate can be a great way to generate wealth<\/span><\/a><span data-preserver-spaces=\"true\">, but it isn\u2019t for everyone. For one, the term \u2018\u2018passive income\u2019\u2019 really does not describe real estate investing accurately.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Becoming an investor is a much more hands-on process than just buying a house and renting it out. All the maintenance and potential issues with tenants will become your responsibility. And if you want to grow your portfolio to multiple properties, the responsibilities will grow exponentially.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The time and effort required simply isn\u2019t realistic for someone who already has a full-time job, for example, or existing family commitments. On the other hand, some people would like to invest in real estate but just don\u2019t have the cash.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Does this mean you have to give up on your dream of financial independence? No\u2014there are other options that can help you generate substantial wealth, some of which don\u2019t require you to be nearly as involved as real estate investing.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In a December\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/money-475\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">episode of our podcast<\/span><\/a><span data-preserver-spaces=\"true\">, Scott Trench and Mindy Jensen named the top five ways to get rich without investing in real estate. Here\u2019s a look at each one.\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">1. Index Funds<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Obviously, one form of investing or another had to make this list. As Mindy points out, \u2018\u2018When people think investing, they typically think of two schools of thought:\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/real-estate-vs-stocks-performance\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">real estate or stock market<\/span><\/a><span data-preserver-spaces=\"true\">.\u2019\u2019<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">There are many different types of stock market investing, but investing in index funds is often recommended to the average or beginner investor. Why? You\u2019re basically investing in the economy as a whole on the assumption that it will perform well over time. This is usually a less risky strategy than investing in just one segment of the economy or a single industry or product.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Scott admits he\u2019s \u2018\u2018a big index fund investor\u201d and has faith in the U.S. economy, which keeps growing and evolving thanks to the continuous introduction of new technologies such as the internet and artificial intelligence (AI). These make the economy more productive in the long term, and Scott thinks it\u2019s \u2018\u2018a very reasonable long-term assumption\u2019\u2019 that an index fund investor will get a 7% to 10% annualized return.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Mindy adds that she, too, is a big index fund investor but tends to pick more \u2018\u2018tech-heavy\u2019\u2019 indices. She also has VTSAX shares, which come with greater risk, \u2018\u2018but also there\u2019s a greater chance of reward.\u2019\u2019\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Ultimately, the great thing about index fund investing is that it\u2019s almost totally passive. And you don\u2019t have to have a lot of cash to invest. You can put in as little or as much as you can afford\u2014it\u2019s completely up to you and your current financial capabilities.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The downside? Index fund investing is a long-term game. You can sell at any time, but Scott warns investors against it: \u2018\u2018I believe you should invest for a very long period of time.\u2019\u2019\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In fact, both podcast hosts agree with Warren Buffett\u2019s statement that his favorite holding time for investments is \u201cforever.\u2019\u2019 The best mechanism here is repeatedly reinvesting the dividends you get, as this will yield you much higher returns over the years.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And when is index fund investing not for you? According to Scott, it\u2019s all about belief. If you think that the U.S. economy actually will shrink over time, with less GDP and less productivity across the economy, you may not feel so confident putting your money in the stock market.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">2. 401(k)s and IRAs<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">401(k) and IRA investing is another way of saying that you\u2019re investing in\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/money-466\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">retirement accounts<\/span><\/a><span data-preserver-spaces=\"true\">. 401(k) plans involve paying into pre-tax retirement funds, whereas the IRA method involves post-tax accounts and is more suitable for people with incomes under $100,000.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If you\u2019re going down the 401(k) route, you can contribute up to $23,000 for the 2024 tax year. The money comes out of your paycheck before taxes, also called a tax-deferred contribution.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">You will only pay tax on your investment when it comes to withdrawing dividends. You can withdraw early, preretirement, but this will come with a penalty. Employers can contribute to 401(k)s, but they\u2019re also available to the self-employed.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Investing in 401(k)s can be \u2018\u2018a super-powerful tool\u201d for wealth building, as Scott explains: \u2018\u2018If you take that $23,000 that you can invest in 2024, for example, and you get an 8% return by investing in things like stock market index funds, what we just talked about, you get to a million-dollar balance in that 401(k) in under 20 years.\u2019\u2019\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The other option is the IRA route or paying into an individual retirement account. It has lower contribution limits: $6,500 in 2023 and $7,000 in 2024 ($8,000 if you\u2019re 50 or older).\u00a0\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">3. Job-Hopping<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">There\u2019s another super-effective way to improve your financial prospects, and it doesn\u2019t require you to invest in anything other than advancing your own career. And the best way to do that these days is to switch jobs.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The days when sticking with the same employer for decades yielded substantial promotions, and well-rewarded seniority are gone for most of us. Mindy points to a very important reality of the current job market: \u2018\u2018There\u2019s more money in the hiring budget for most companies than there is in the retention budget.\u2019\u2019\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">As an employee, you\u2019re always in the strongest position when negotiating your salary\u00a0<\/span><em><span data-preserver-spaces=\"true\">before\u00a0<\/span><\/em><span data-preserver-spaces=\"true\">starting a new job. In 2022, 49% of job hoppers got inflation-beating raises, as opposed to only 42% of those who stuck with their employer.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And if this makes you feel like you\u2019re somehow being disloyal to your employer, don\u2019t worry: Job-hopping is very normal now. As of January 2022, the average amount of time a U.S. employee stays with any one employer was\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.bls.gov\/news.release\/pdf\/tenure.pdf\" target=\"_blank\" rel=\"nofollow noopener\"><span data-preserver-spaces=\"true\">just over four years<\/span><\/a><span data-preserver-spaces=\"true\">.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Scott and Mindy advise focusing on adding value to your resume with each new job, whether through upskilling or taking on new responsibilities. You then stay in your current job so long as your new skills (and added value) are being appropriately rewarded. Once you\u2019ve plateaued at your current company, it\u2019s perfectly fine to move on.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Scott does offer a word of caution about counting potential bonuses when job-hopping. Sure, a job may promise you $90,000, where 50% of that is a bonus, but you need to be able to afford the risk of not getting the bonus. If you\u2019re living paycheck to paycheck, you need to concentrate on jobs that may offer you lower salaries, but the income is steady.\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">4. Boring Businesses<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Doesn\u2019t sound too attractive, right? Actually, boring businesses are some of the most lucrative investment opportunities around. What do we mean by boring businesses? Scott gives a few examples: HVAC companies, dry cleaners, small trucking businesses, sanitation and plumbing businesses, and even asphalt paving businesses.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Why are these unglamorous ventures some of the best ways to generate wealth? There are several reasons. One is that these types of businesses are surprisingly lucrative\u2014they can generate $300,000 to as much as $750,000 a year. Given that a business typically sells for twice the amount of its annual cash flow, you could easily get $600,000 or more when it comes to selling the business and then reinvest that money into, for example, real estate.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">One thing potential investors will need to remember is that businesses are a lot of work\u2014\u2018\u2018this will probably be a full-time job for at least six months to a year, maybe several years,\u2019\u2019 says Scott. Your job as an investor will involve systematizing and modernizing the businesses, as well as improving marketing strategies and reputation building.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Remember, a lot of these businesses are owned by baby boomers and don\u2019t even have websites, so \u201c[there\u2019s] tons of opportunity in this space and not enough competition from buyers at this point,\u201d emphasizes Scott. This is definitely a less competitive investment space than real estate, but it can give you a great leg up to real estate investing in the future.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">You also will need substantial amounts of cash to buy even a tiny business\u2014in the hundreds of thousands. However, you may need a bit less if you manage to get a business association loan or seller financing to help you.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">If you\u2019re interested but daunted by having to navigate an industry you know nothing about, consider buying a franchise. This type of business investing gives you a playbook, as it were, Scott explains. You don\u2019t need to know as much about the ins and outs of running the business because the template is already there.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">5. Side Hustles<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">Finally, the wealth-generating possibilities of\u00a0<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rookie-294\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">side hustles<\/span><\/a><span data-preserver-spaces=\"true\">\u00a0should not be underestimated. These come with varying degrees of hands-on work and responsibility. Incomes also vary a great deal, depending on product and location, from $25,000 to as much as $100,000.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Mindy recommends being mindful of \u2018\u2018the location, the community needs, and the business viability.\u201d That statistic about 90% of small businesses failing in the first year? It\u2019s \u2018\u2018not completely accurate, but it\u2019s not completely inaccurate,\u2019\u2019 Mindy says.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">You need a plan and a buyer for your product, so do your research and make sure what you can offer will find demand. Scott also makes an important point about being honest with yourself about just how passive your side hustle will be. If you end up spending all your free time basically actively producing something for your new business, it may not make sense financially.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Ideally, a side hustle should eventually take on its own momentum without you needing to put a ton of time and effort into it. \u2018\u2018I think people fall into the trap of their side hustle not being as lucrative per hour as their day job in many cases,\u2019\u2019 warns Scott.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">And if you do fail? Try something else. In fact, most successful side hustlers try out a few things before they strike proverbial gold. Keep trying\u2014just choose wisely, and choose something that could one day allow you to quit your day job instead of having to work two jobs indefinitely.\u00a0<\/span><\/p>\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Final Thoughts<\/span><\/h2>\n<p><span data-preserver-spaces=\"true\">This is by no means an exhaustive list of ways to build wealth without investing in real estate. As Scott and Mindy admit, there are a ton of other ways, cryptocurrency and horse breeding among them.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The point is to choose something you\u2019re interested in and comfortable pursuing over a period of at least a few years. Remember: Most successful investing requires patience; some of it requires dedication and hands-on work.\u00a0<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">Who knows? It could even land you in an alternative career one day, so why not give it a try?<\/span><\/p>\n<p class=\"italic\"><b>Note By BiggerPockets:<\/b> These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.<\/p>\n<\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.biggerpockets.com\/blog\/ways-you-can-get-rich-without-investing-in-real-estate\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In this article Investing in real estate can be a great way to generate wealth, but it isn\u2019t for everyone. For one, the term \u2018\u2018passive income\u2019\u2019 really does not describe real estate investing accurately.\u00a0 Becoming an investor is a much more hands-on process than just buying a house and renting it out. All the maintenance [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":10460,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"fifu_image_url":"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2023\/10\/counting-money-1024x517.jpg","fifu_image_alt":"","footnotes":""},"categories":[9],"tags":[],"class_list":["post-10459","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/comments?post=10459"}],"version-history":[{"count":1,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10459\/revisions"}],"predecessor-version":[{"id":10461,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/posts\/10459\/revisions\/10461"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media\/10460"}],"wp:attachment":[{"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/media?parent=10459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/categories?post=10459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/imsfund.com\/index.php\/wp-json\/wp\/v2\/tags?post=10459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}