There is no shortage of guides for quick prosperity.
(Photo: mauritius images)
Dusseldorf Leave the five-day week to others and at 40 just watch your own money multiply. What sounds tempting seems possible. This is shown by two new releases with pleasant concrete examples. Those who follow the line need a lot of courage and a complete new start in a self-determined entrepreneurship.
Justin Donald describes himself as a specialist in low risk investments. He sees himself specialized in simplifying complex financial strategies and creating investment systems with discipline that reliably bring profitable results. With his ten commandments of cash flow investing, he made it into the American bestseller lists for specialist books. That is why the Finanzbuch-Verlag decided to bring the translation by Philipp Seedorf to the market in Germany as well.
At the age of 40, Donald left his professional life. Since then he has been able to cover his family’s livelihood with the income from his investments. That is a good prerequisite: Donald writes about himself, so he goes into the real and by no means only fictional world of wealth.
His concern is clearly outlined if he wants to give readers a “nudge” on the path to financial independence and lead them to the life everyone dreams of without having to trade time for money. The author thinks it is a mistake to invest your money in the stock market. It is too risky for him there. Instead, he relies on passive income: permanent cash flow, i.e. constant income.
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Real estate is one of his favorites. Location and infrastructure are particularly important in this context. If you want to get rich quick, you shouldn’t invest in a city with only one major employer. If this go bankrupt, suffer the whole city. That depresses property prices. Big cities with strong economic growth are better.
Justin Donald: Lifestyle Investor. The 10 Commandments of Cash Flow Investing for Residual Income and Financial Freedom.
Finanzbuch Verlag
Munich 2021
320 pages
17 euros
At first glance, that sounds like cheap generalities. Similar to his advice: reduce your risk. But the book provides more and richer resolutions once Donald delves into his ten investment precepts.
If you want to find particularly lucrative deals, you should look for a distressed, unprofitable company. With the help of his network of investors, Donald bought Dressbarn. The American retail company had warehouses and a well-trained team, but the company had fallen badly. She was on the verge of bankruptcy, which made a lucrative deal possible.
It consisted of strengthening online trading, moving away from physical stores and buying up the brand. While the previous unsuccessful management was emotionally attached to the old company and mourned the old structures, Donald concentrated on getting rid of the “ballast”. Under the motto that it is better to be small and profitable than huge and unprofitable, the 30 best of the 9,000 employees were taken on.
The author undoubtedly succeeds in describing vividly how he quickly came to be rich. But how realistic is such a deal in terms of its own feasibility for interested imitators? Certainly even less likely in the welfare state of Germany than in America, which is more liberal in the market economy.
It is similar with many other examples from Donald’s investment commandments, for example when he buys real estate in order to sell it at a profit after exactly one year plus one day – and thereby saves speculative taxes.
Donald also did not shy away from investing in closed-end real estate funds. At this point the question arises: Does that still correspond to his very own mantra of taking little risk and therefore foregoing the investment form shares? Hardly likely. The fact is that closed-end funds involve enormous and far higher risks than stocks, because investors have little opportunity to get their capital during the often long terms or even to influence business policy.
Even more daring is Donald’s call to use debts for your own benefit. For example, pledging a million dollar Amazon stock to the bank to get a $ 800,000 loan. The money raised is available for new investments, is the apparently ingenious idea.
Apart from the fact that at this point the share serves as a means of wealth, the author fails to mention that the bank would demand the money back immediately as soon as the Amazon shares should lose value. Such credit-financed transactions, as the author describes, were a major reason why the dotcom bubble not only burst after the turn of the millennium, but led to a stock market disaster.
“Create, create, build houses” – that is not his world
Donald’s lucrative deals with bundled loans are exciting. These are loans secured by commercial real estate mortgages. These loans are often backed by Wall Street investment firms who sell them to other investors in the capital market. Such deals are strongly reminiscent of the real estate crisis and the resulting financial crisis in 2009. It was triggered by bundled real estate loans.
Such advice certainly does not appear to be risk-free, even if the author would like to make this believe. But if you have always wanted to know how you can make a lot of money quickly and legally with such transactions, you will find a lot in this book, including detailed examples including projects described by name.
Working well, “create, create, build houses”, that’s not Justin Donald’s world. MJ De Marco rejects such a “road of financial mediocrity” even more. Advice like “go to school, get good grades, graduate, get a job, save ten percent of your salary, invest in stocks” or “cut out discount coupons” is not his world.
It’s about nothing less than cracking the code of wealth and having a “complete psychological and mathematical formula for it. The goal is to indulge in wealth at a young age. That doesn’t work as a dependent employee, but only with self-determined entrepreneurship and an orientation towards biographies such as Jeff Bezos at Amazon and Elon Musk at Tesla. “
MJ DeMarco: The Millionaire Fastlane: How to Break the Wealth Code for a Wealthy Life.
Finanzbuch Verlag
Munich 2021
250 pages
18 euros
Those who want to think their way into these worlds and are open to such paths can read the work with profit. For example, when it comes to the best and most lucrative legal forms for “fast lane” entrepreneurs, the Fastlane drivers who choose the shortcut to wealth in a relaxed manner.
The formula of the book is: wealth equals net profit plus assets. Or: wealth equals intrinsic value plus compound interest. It involves variables such as profit, units sold, and assets multiplied by an industry multiplier.
It quickly becomes clear: this is not easy reading. But clear examples make it easy to understand what it is about. For example, when a 24-year-old employee quits her job to become a self-employed computer technician.
Her company is growing rapidly, so that she soon hires technicians and expands. Within a few years, the new founder owned a company that operates in six states in the American Midwest, and she is now the head of a service company that she eventually sells to a major computer manufacturer for $ 21 million. Almost out of nowhere, the ex-employee created an asset.
The fast lane to wealth is actually possible, as other detailed scenes make clear. They are pleasantly specific and worth reading. Whether they are also worth emulating depends on the necessary specialist knowledge and certainly on the courage to take risks: to start something new, to leave the monthly paycheck behind without knowing whether all of your efforts will ever pay off financially. This is not for everyone.
Warren Buffett and Co. – as simple as it is ingenious
Those who want to be a few numbers safer should orientate themselves better on stock market classics, which see the stock as a means to prosperity and even wealth – and have successfully proven this. Unlike the self-made entrepreneurs Donald and De Marco, the motto of the American stock market legend Warren Buffett and his brilliant partner Charles Munger is as simple as it is ingenious: “We only buy what we understand. If something is too difficult, we turn to something else. “
The two investors have stuck to it for more than five decades. An annual return of a good 20 percent over the past 54 years and an increase in the value of a Berkshire Hathaway share from 19 to currently 422,000 dollars prove them right. The rapid rise in share price, with the many holdings available to everyone in the form of Berkshire stock, made Buffett a billionaire – and early shareholders millionaires.
How it works? With seemingly simple strategies, a lot of patience and the courage to often do nothing. That means holding investments out of conviction – or selling them if the conditions that led to the purchase change. A virtue that sounds simple, but is difficult to implement in everyday life. But this is exactly where the biographies and strategies of Buffett, Munger and, above all, their great mentor and role model Benjamin Graham that are worth reading help.
More: Examples from everyday capitalism
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