I recently read the book ” The Millionaire Fastlane *” by MJ Demarco and today I would like to introduce you to the basic concept of the book.
The main message: stocks do not make you rich!
The book has made me think a lot in the past few weeks, so I have to admit that for a long time I followed the “wrong” path.
Which track are you on?
Back to the beginning, let’s start with the theory. Demarco compares asset accumulation with Traffic.
He distinguishes between three tracks:
Who is on the sidewalk cannot handle money and lives by the saying: “Why is there still so much month left at the end of the money?”.Their money is spent meaninglessly until there is nothing left. Common to all “sidewalkers” is that they go through life from paycheck to paycheck without building sustainable wealth.
The slow lane
The slow track is the classic hamster wheel. Earn money by putting x percent of it aside every month. Invest in long term equities and ETFs and at 50 or 60 you can opt out of working life and have a million in your portfolio. The classic millionaire next door …
But there are two problems: First, it takes an incredibly long time to reach this goal, and second, you are 50 or 60 when you reach your goal. Iit would be much cooler to have the million with 30 or 35 in the account, right?
The fast lane
The fast lane is the track of entrepreneurs. They take a high risk, invest in themselves and their company, and within a few (5 to 10) years manage to create a large fortune through their own business. The author himself built a company, which he then sold for several million. The fast lane is the only way to really build fast assets.
Preach water and drink wine
So you see, this book has really brought me a bit of rethinking. In his book, Demarco addresses many American greats directly and even mentions them by name. But if you look around in the blogging sphere, you’ll quickly understand that many so-called “influencers” preach water and drink wine. They tell you that you have to invest in ETFs. That you should invest in dividend stocks. That you should save x percent of your income and that at the age of 50 you are finally a millionaire.
All well and good, except they themselves do not live up to these rules …
They themselves make their money with entrepreneurial investments, video courses, coaching sessions, etc. in which they teach you the above points. You are on the slow lane whereas they are well on their way on the Fastlane and have built a company that brings returns well above any ETF.
What do I need shares for? should I start building a business instead?
A good question right? Of course, shares have their merits. Any strategy with high returns (such as self-employment, entrepreneurship) is linked to certain risks. Stocks are a great way to pull out great profits and invest long-term while mitigating the risks. Shares are tangible assets. Even if they are sometimes subject to very strong fluctuations in value, the stock markets are rising in the long term.
My question to you: Which track are you on?