Updated: May 15
I’ve often thought, is there one trick that can save us from our situation? Lift the poor out of poverty, let us tap our creative potential to change the world, or make billionaires out of anyone? In other words, what is The One Grand Move? There is, and it works for everyone. Nobody is locked out. The homeless have used it to go from living in their car to CEO. Artists have used it brilliantly to go from obscurity to world-renowned celebrities. University dropouts have used it to go from social misfit or academic slacker to billionaires. Technologists are using it to retire even before finishing college. What is this mystical fountain of success? If I had to summarize, the most effective method of going from rags to riches is Ownership. To expand a little, it’s legally and privately owning something that creates value. This is Golden Rule #1. Let’s consider an anonymous graffiti street artist in Berlin, Germany. Because he is giving up Ownership by painting illegally on buildings he doesn’t have permission to paint, it will be more difficult for him to have Ownership in his works even if he gains notoriety for his art, and even more difficult to build an art career without fear of recrimination. Other graffiti artists paint over his masterpieces because anything goes when you’re operating in a lawless world. Another street artist in Paris, France also has impressive art, but she works on long-term sanctioned projects like murals to improve city spaces, has been granted Ownership of these projects, and because they are legal and part of the open, free market, sells reprints of popular works online, which turns into a fashion line, which leads to more opportunities. Here are the challenges that we have when it comes to Ownership.
We’re living from paycheck-to-paycheck and have no money left over to buy anything other than what we need to survive. We’re too poor.
We’re living a certain lifestyle that demands all of our money and none is left over. We’re well off, but we make ourselves poor through our decisions and limit our opportunity.
We have a surplus of money, but have no idea how it relates to Ownership and can’t execute on it. We make good savings decisions, but don’t seek or cannot find an opportunity.
We have a surplus of money, but instead of creating value through Ownership, we destroy it by gambling. Many people participated in this right before the housing bubble burst.
We don’t realize that time is interchangeable with money. Therefore, we don’t spend our time creating any value, or we spend it destroying its value.
Conventional wisdom in our culture associates Ownership with things we own such as a house, cars, furniture, clothes, and so on. This is entirely different from value-creating Ownership because these things don’t generate any money, they consume it. Paying interest on loans, maintenance, insurance, taxes, all work against creating value. This has led to an entire economy built around renting out your house, using your car as a taxi, and other freelance gigs which are all designed to create value with Ownership you already had. For some, this is a great way to take advantage of the networks and applications created by these corporations. At the top, however, someone else has Ownership of those businesses. Since selling my house, I’ve moved into a rental apartment that is smaller, but more modern and comfortable. With one idea, it accomplished these goals:
Paid off my student loans almost ten years early.
Put the remainder of my home’s proceeds to work through investments.
Permits me to walk to work every day and drastically lowered my annual mileage.
Freed me from the obligation of making expensive upgrades and fixes to an old house.
Converted extra stuff to cash by selling it and gave the rest to charity.
Did you see how Ownership changed hands? I went from paying off my student loan debt in ten years to debt-free and adding to my investment portfolio. Selling my house allowed a transfer of Ownership from the rich (student loan provider) to the poor (student loan payer). It vanquished a value destroyer (student loans) and appointed a value creator (investments) in its place in the same month, with money that was otherwise unavailable in my house. The pen truly is mightier than the sword. None of that is possible if things you own are consuming all of your resources every month, but not creating any value. That’s the key – Ownership should create value. Now there is a reversal in fortune, where my investments pay me just like I used to pay the student loan provider. How do we acquire Ownership that creates value? The simplest way to begin is to have some kind of savings. That’s why the first 3 (of 7) Golden Milestones focus on efficiency and reducing costs. Savings are the pure form of opportunity not yet employed in value creation. With savings, you can get started by maxing out your tax-advantaged accounts, like a 401(k) or Roth IRA. Investing in low-cost, diversified index funds has never been easier, and even in a tough market, you can protect your choices by hedging against risk, just like the professionals. That qualifies as Ownership that creates value and the government allows us to avoid paying taxes on all of our gains and income in these accounts. Amazingly, the government is okay with losing all of this tax revenue, which is why I say put your money in while you can, before they wake up one day with a national debt hangover and change the rules of the Money Games by lowering the contribution limits. Which do you think is easier, creating Ownership yourself, or convincing someone else to give you Ownership? When we work for a company owned by someone else as an employee, we’re in the very difficult position of demonstrating value creation at a level that convinces someone else to offer us Ownership. This is why I’ve ranked our own Ownership ideas and investments first on the priority scale below. My recommendation is to always work on all three goals simultaneously:
1. Ownership from Your Value-Creating Ideas
Building a brand, like this website, is my example of creating value with an idea. They start out as tiny seeds and you cultivate until it starts to grow.
2. Ownership from Your Value-Creating Investments
For starters, most of us understand our industry as an insider, even if we aren’t professional investors. You can also turn a passion into an investment just by being willing to do the research.
3. Ownership from Your Value Creation as an Employee
In the beginning of my career, the only Ownership for pilots was in their seniority, but it wasn't transferable. Since then, I’ve only worked at companies that are 100% employee-owned.
Ideas are interesting because they only hold value if the world knows about them and values them. For example, when Leonardo Da Vinci was commissioned to paint the Mona Lisa, it was just an idea that grew admirers, reputation, and value over 500 years until it became the world’s most famous and first billion-dollar painting. If Leo was still alive, he might lease it to the Louvre to retain Ownership – but still provide him with an income. Because once you’ve sold it, it’s gone.
The Mona Lisa started as an idea.
Ownership ideas are everywhere. Artwork, music, patented inventions, websites, consulting expertise – anything that you are passionate about and can be protected as your own work. This will take some creative effort and experimentation. Ideally, as one of our favorite angry philosophers, Nassim Taleb, has proposed, it allows you to scale up if the world considers what you are offering as valuable. Certain types of Ownership, once acquired, cannot be revoked. Citizenship (in most countries), education, and skills are all things that can’t be taken from you. Citizenship is a mixed blessing – along with the ability to legally vote and work in your country comes the inevitable taxes. However, for anyone with the equivalent of citizenship in the United States, United Kingdom, or any OECD country, these are the richest countries in the world with access to the largest markets and often relatively low taxes. This means that citizenship can be a Golden Goose in itself.
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-Golden Goose Guy
In my next article (link below), we’ll talk about how to use Ownership as a secret weapon to cast your debt back into the fiery depths from whence it came.
Next Article #4: Unmasking the Villain Behind Your Debt
Previous Article #2: The 7 Golden Milestones to Financial Freedom