Rich people play the money game to win and poor people play the money game not to lose, but it’s a spectrum.
I recently read The Millionaire Fastlane when I ran across this principle, but I realized that there is actually a middle ground. It’s for those that are in the getting rich slowly lane. The book calls the middle ground group the slow lane travelers.
According to the book, three are three financial roads traveled; the sidewalk, the slowlane and the fastlane. The sidewalk traveler are living well today at the expense of more security tomorrow. They are essentially living paycheck to paycheck. Side walkers are onlookers. They don’t invest, only gamble. The worst way to do this is by playing the lottery or the casinos. They are literally throwing away money. This group is generally terrified of losing money with investing. They are mostly thrill seekers looking for a free lunch.
The slowlaners are the passive investor crowd. They sacrifice today so that they can be better off in the future. This is the opposite of the sidewalkers. They invest in index funds and passively invest in REITS and realestate and exploit compound interest. This is in essence playing not to lose big, but at least being brave enough to leave the sidewalk and take a seat at the table. You can of course lose if you sell during a market crash or bear market, but you won’t lose as much as those playing the game to win. This is because your investments will get average returns and average losses. If you’re going to invest you can’t be afraid to lose money. Like serious money. This is the risk of investing, and with investing you have to take risks. When it comes to the stock market you have to realize that the loss is only a paper loss and it’s only realized after selling stocks or index funds. The getting rich slowly group generally realize this and they have the disciple to delay gratification, knowing that they may not get rich until after 25-35 years of consistent disciplined investing.
The fastlaners are working hard today on something that people value so that they can become wealthy in the next 5-10 years. They are playing to win and aren’t afraid to lose big. They aren’t afraid to fail and fall flat on their faces. They aren’t afraid to be bankrupt. Day trading and option trading fall into this group. Also entrepreneurs and business owners do as well. According to data from the U.S. Bureau of Labor Statistics, about 20% of U.S. small businesses fail within the first year. By the end of their fifth year, roughly 50% have faltered. After 10 years, only around a third of businesses have survived. As you can see, most don’t win big and end up failing initially; and some of the ones who do win big don’t know when to walk away and join the slowlaners. You have to be wise enough to know that you must concentrate your investments to get rich and diversity to stay rich. There are a lot of millennials who are now millionaires due to the meme stocks and cryptocurrency craze who have not quite realized this little fact. You get rich quickly by taking huge risks as it pertains to business and entrepreneurial pursuits or by making 900% return on an investment. You stay rich by holding index funds and fixed income. Unfortunately the ones who don’t understand this little fact won’t be millionaires for much longer.
The book also list 12 distinctions between slow lane and fast lane millionaires.
- Slowlane millionaire make millions in 30 years or more, while fastlane millionaires make millions in 10 years or less.
- Slowlane millionaires need to live in middle class homes while fastlane millionaires live in luxury estates.
- Slowlane Millionaires have MBA’s and fastlane millionaires hire people with MBA’s.
- Slowlane millionaires let their assets drift by market forces while fast lane millionaires control their assets and have the power to manipulate their value.
- Slowlane millionaires can’t afford exotic cars, while fastlane millionaires can afford to drive whatever they want.
- Slowlane millionaires work for their time, while fast lane millionaires have time working for them.
- Slowlane millionaires are employees while fast lane millionaires higher employees.
- Slowlane millionaires have 401K’s while fast lane millionaires offer 401K’s.
- Slowlane millionaires use mutual funds and index funds to get rich, while fastlane millionaires use them to stay rich.
- Slowlane millionaires let other people control their income streams, while fastlane millionaires control their income streams.
- Slowlane millionaires are cheap with money, while fastlane millionaires are cheap with time.
- Slowlane millionaires use their house for net worth while fastlane millionires use their house for residency.
The book also discusses how fastlane millionaires avoid the heard mentality in order to achieve fastlane millionaire status. For example, Instead of digging for gold, sell a shovel. Instead of taking a class, offer a class. Instead of borrowing money, lend it. Instead of taking a job, hire for jobs. Instead of taking a mortgage, hold a mortgage. Break free from consumption and switch sides. In actuality this can easily be done given the technological advances of today. For example there are many celebrities and noncelebrities that are selling shovels by starting their own cryptocurrency. With clubhouse, fiver, upwork, udemey, outschool and many more platforms you can teach whatever class you want. You can become a hard money lender or invest in class A shares through realestate syndications or debt deals and loan money to realestate investors with realty shares, realty mogul and the other host of real estate crowdfunding sites. You can hire a virtual assistant and leverage that resource or you can do a seller finance realestate deal and hold a mortgage.
One other way that fastlane millionaires get their millions is to serve millions or at least hundred of thousands of people. For example actors and athletes entertain/serve millions of people and that is the reason they can command such a high salary. Owning one starbucks probably won’t get you on the fastlane millionaire staus, but owning 10 franchises might do the trick. practicing as a doctor and seeing 40 patients a day won’t get you on the fastlane millionaire path, but owning a practice/surgery center where your hire doctors that are seeing thousands of patients a day will.
The book is an interesting read and the author does support living below your means and investing in index funds, but of course supports taking a lot or risks along the way. Right now I am a slowlaner with some fastlane tendencies, but for right now I plan on continuing to enjoy the ride and living below my means as much as possible while expanding my means by seeking to earn a higher income and then exploiting the difference by investing passively through index funds and realestate.