Why The Wealthiest People I Know Focus On Investing Not Salary

About this Video

• Video Title: Why The Wealthiest People I Know Focus On Investing Not Salary
• Channel: The Doctor Investor
• Speakers: Dr. Shamim Nazir
• Duration: 00:06:58

Introduction

This video explains why the wealthiest individuals prioritize investing over salaries to build wealth. Dr. Shamim Nazir argues that investing, particularly in diversified assets, offers superior returns due to compounding and tax advantages, unlike the time-limited income from employment.

Key Takeaways

• Investing vs. Salary: Investing surpasses salary income due to compounding returns and potential tax benefits. Salaries are limited by time and have a built-in ceiling.
• Diversification: Wealthy individuals diversify across asset classes, including stocks, bonds, real estate (particularly commercial real estate), small businesses, and private equity. Non-correlated assets, whose values don't move in the same direction, are key to mitigating risk.
• Asset Classes: The video highlights several asset classes:
  • Stocks: Accessible through buying company shares.
  • Bonds: Offer stability, often counterbalancing stock market fluctuations.
  • Real Estate: Commercial real estate provides higher returns than residential, accessible via direct ownership, REITs, syndications, or crowdfunding.
  • Small Businesses: Offer high ROI and immediate control, but require research and understanding of the market.
  • Private Equity: High-return but illiquid investments requiring significant capital and long-term commitment. Involves acquiring and improving undervalued companies for later resale.
• REITs vs. Syndications: REITs offer liquidity and ease of investment, while syndications provide higher returns but lock up capital for longer periods.
• Ultra-Wealthy Portfolio: The ultra-wealthy typically allocate a significant portion (nearly half) of their portfolios to illiquid alternative assets, including real estate, private equity, venture capital, hedge funds, and private credit, seeking long-term gains.