If you’re reading this, it’s probably safe to say you care about your financial security.
Whether your goal is to secure a comfortable retirement or someday purchase a custom mega-yacht, you want your money to work hard for you. In this post, we break down the top wealth-building best practices used by multimillionaires that anyone can implement to get more out of their money.
Developing passive income is one of the most effective means of building wealth. Passive income is defined as earnings from an enterprise in which a person is not actively involved – and who doesn’t like the idea of making more money without getting another full-time job? Passive income can be created in any number of ways, with investing being the most well known. This can encompass assets from commercial real estate to vacation rentals to farmland to franchises.
Wealthy individuals, including some of the most well-known celebrities, typically have multiple passive income streams. Arnold Schwarzeneggar, for instance, is a prolific real estate investor. After Selena Gomez got her start with Disney, she stepped outside of singing and acting to develop her own fashion line, along with forming collaborations with Puma and Coach. Oprah has a number of media ventures under her name, including the monthly magazine O, cable channel OWN, and production company Harpo Productions, which co-produced the movie, Selma.
Investing your money too heavily in one asset class, such as leaving all your investments in the stock market or going all-in on the latest memecoin, can have an outsized impact on your net worth. Diversification is to your portfolio what a balanced diet is to your health – a varied menu makes for a better chance of overall success.
Leonardo DiCaprio is a great example of a high-net-worth individual who leverages a diverse portfolio of passive income streams to keep his money growing. Recently, DiCaprio has made venture capital investments in Polestar, Mosa Meat, Aleph Farms, and Blue Planet. He owns a number of pieces of prime real estate (one that functions as a rental property), and is currently developing an eco-resort in Belize – and those are just the assets that have been publicly disclosed.
Assembling a team of experts is a best practice used by some of the wealthiest and most successful investors. Top real estate investors work with skilled teams of agents to secure their ideal properties. Celebrities like Shaq and Justin Bieber have business managers who help them do their due diligence and make investments. There are, after all, only so many hours in the day, and very few of us (including those with stratospheric net worth) have the means to make building wealth another job on top of our chosen profession.
Rather than spending valuable time re-educating yourself to do the job of a wealth management team, the more efficient solution is to hire one. There are multitudes of professionals who can help you achieve your goals regardless of your price point. Your team of choice could include a certified public accountant, an estate planning attorney, an investment advisor, a financial planner, and/or a certified private wealth advisor. Taking the time to thoroughly vet each of these pros is still a more efficient use of your time and money than trying to do everything yourself.
The word “hedging” refers to taking steps to protect the value of your investments against forces such as inflation. For most developed capitalist economies, inflation is a market force that’s as inevitable as the rising tide. While wage increases can dampen the impact of a cost-of-living increase, investing responsibly is one of the best ways to hedge against inflation in the long term.
To successfully hedge against inflation, a portfolio is structured so that its rate of return outpaces the inflation rate, which means it includes assets that hold their value or appreciate over time. These include stocks, index funds, Treasury Inflation-Protected Securities (TIPS), and real assets like fine art, real estate, and (our personal favorite) franchises. To learn more, check out our post about building a portfolio that resists inflation.
Unfortunately, there is no quick and easy way to build wealth overnight – short of winning the lottery, of course. Patience is the most important strategy for any growth-focused investor. Warren Buffet didn’t amass his wealth from investing by making snap judgments and panicked decisions based on the news of the day. Quality research and due diligence take time, certain markets are inevitably volatile, and some high-yield assets can take years to mature. Through it all, a long-term mindset is the best tool anyone can have in their investing toolbox.
Through fractional ownership of franchises, you have the opportunity to benefit from low volatility, predictable returns, and healthy diversification without the same large upfront costs or challenges. With as little as $500, you can start investing in one of the favored wealth-building tools of celebrities and ultra-wealthy individuals.
While all investments have some level of risk, investing in fractional franchises provides investors with the opportunity to reap the benefits of franchising with a completely passive model. There is no learning curve to maneuver, no management skills to build, and no time investment running a franchise location since you’re working with our professional franchise investment and management teams. This model allows everyday investors to put an important asset class to work in their portfolio.
Want to learn more? Check out our TNT Franchise Fund offerings page to learn more and watch our offerings deep dive video.
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(1) Portfolio IRR projections are calculated using all cash flows, including the initial investment of $25,000,000 of offering proceeds, annual earnings before interest, depreciation and amortization (“EBITDA”), less estimated corporate taxes, and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.
(2) Cash Yield projections are calculated as the arithmetic mean (average) of five years of annual cash flows (including EBITDA, less estimated corporate taxes) divided by the initial investment of $25,000,000 of offering proceeds.
(3) Equity IRR projections are calculated using the initial investment of $25,000,000 of offering proceeds and the sale of the entire portfolio at the end of the fifth year at 5x EBITDA.