According to statistics from the US government, 95% of Americans fail to retire successfully by age 65, which means they must either continue working or reduce their quality of lifestyle dramatically just to survive during their golden years.
Total Wealth Academy CEO Steve Davis tells the California Business Journal about where the idea of his academy comes from and what they do to improve their students’ financial literacy.
Davis speaks passionately about helping people understand that two factors lie at the core of the retirement issue. On the one hand, average Americans are “lifestyle creeps” as Davis describes, which means they enjoy splashing out on items of luxury. On the other hand, they fail to invest in income-producing assets, which means they lack a second income stream
“Being a lifestyle creep keeps you in a never-ending cycle of living paycheck to paycheck. Every time people get a raise or a promotion, they increase their quality of lifestyle. They buy newer, more expensive cars, or newer, bigger houses. They splurge on watches, clothes, and excessive travel,” Davis says.
Statistics show that about 75% of middle-class Americans live paycheck to paycheck and that 50% of people who earn $500,000 or more also live paycheck to paycheck. Davis is convinced the reason behind these statistics is living life as a “lifestyle creep”. But there is more to this matter.
“People don’t just have an expense problem; they also have an income problem. They just don’t make enough money to save for retirement, the so-called Golden Years. I call it a Golden Lie,” he adds. Davis says people are not retiring with income, but savings, which put a strain on their retirement years. Savings are finite—what happens if they run out of money? Davis doubles down on the importance of investing.
“Successful people establish second income streams, which keep generating money when they retire. Like that, they are not dependent on a sum of money that should last until they die, but they are supported by a continuous income stream,” the CEO says.
To support his idea on the importance of a second income stream, Davis cites Warren Buffet, an American investor and businessman: “Never depend on a sole source of income; always invest to create a second.”
So what should people invest in? “But one should avoid stocks, mutual funds, gold, silver, and crypto because they do not generate cash flow. You have to invest in businesses or real estate that produce cash flow. Nine out of ten millionaires use real estate to build that second income stream that gives them financial stability,” Davis says.
The academy leader and investor is a proponent of real estate investing, as he says it changed his life and adds it is responsible for anywhere from 70-90% of the millionaires in the world today. “Just travel back a century and listen to Andrew Carnegie, an American industrial entrepreneur, who said 90% of all ‘millionaires become so through owning real estate. More money has been made in real estate than in all industrial investments combined. The wise young man or wage earner of today invests his money in real estate,’” Davis says.
Davis says this investment approach is effective because every dollar invested in real estate makes money on four fronts: equity capture, equity build-up, appreciation and cash flow. “If you want to embrace your Golden Years on retirement, you need cash flow,” Davis says.
Total Wealth Academy promises to teach people how to effectively build a second income stream by investing passively in commercial real estate, such as large apartments, self-storage, senior living, hotels, and more. “The problem is that the average person doesn’t understand that real estate makes money in both up and down markets. We are training our students to understand this particular market and learn how to deal with it,” Davies says.
The primary objective for their students is to establish a supplementary source of income that not only fulfils their wants and needs but surpasses them. Many Total Wealth Academy students aspire to double their current earnings from their primary job. “This enhanced income provides them with the means to indulge in romantic endeavors, explore the joys of travel, and relish all the finer aspects of life, ultimately fostering a sense of financial security and peace of mind,” Davis says.
The academy chief says their students learn to invest their money efficiently to ensure a solid second income stream, break the cycle of living paycheck to paycheck, and make the best of their retirement years. “We need to change our thoughts about retirement. The goal is not to retire but to become financially independent, which allows you to retire at any age,” Davis concludes.
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