Business ownership and real estate are the two wealth building asset
classes financial advisers typically don’t talk about (because they
can’t sell them) even though they are essential components to many
wealth plans.

Just to be fair, however, business ownership and real estate aren’t
for everyone either. These two asset classes have their own set of
issues (there is no perfect solution) and require far more active
involvement to create excess returns.

You must have entrepreneurial skills and a deep commitment to your
vision to compete. Additionally, the risks are much higher and the
outcome is less certain. Finally, both of these asset classes
require a higher dedication of your scarcest resource – time.

With that said, if you have what it takes you can gain huge
leverage and tax advantages. There is literally no practical limit
to the mathematical return you can make on investment.

Some entrepreneurs and innovative real estate investors have gone
from zero to financial security in under 5 years starting with
little or nothing – something you can’t do with paper assets.

With real estate and business ownership you are limited only by
your dedication, abilities, and creativity. It is a higher reward,
higher risk path that can be good if you have entrepreneurial
dreams and skills.

One of my favorite ways to manage the risk (something you will
learn more about in future lessons on risk management) is to work
the two paths simultaneously and hedge your bets.

For example, one of my coaching clients has a passion for real
estate and his spouse has a high earning career she loves. He is
building the real estate portfolio for wealth while she supports
current lifestyle with her earned income. They keep their their
expenses below her earnings and max out retirement plans with paper
assets each year.

With this plan they are working two simultaneous paths to wealth –
one through traditional savings and paper assets, and the other
through real estate. Because of other risk management tools we’ve
implemented their risk of failure is so small their ultimate goal
is a question of “when”… not “if”.

Another client is building his wealth through growing two separate
businesses. He also purchased the real estate that his
companies rent and contributes massive amounts annually to
his wife’s and his retirement savings. Each component – his
business, real estate, and paper assets – are individually
sufficient to provide financial security. It is really just a
matter of which one will get there first – not whether he will
reach the goal at all.

Notice how these paths are not mutually exclusive but can be
creatively combined to increase synergy and reduce risk.

You homework is to build these concepts into your wealth plan. Do
you fit one of the two profiles where you can use paper assets
exclusively? If not, how are you going to implement business
ownership with real estate while applying risk management?

Map out your wealth plan. Commit it to writing.

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Connie’s comments: I work with a senior financial advisor when I map out financial strategies with my clients which include real estate, business ownership and business structuring, tax planning and paper assets. Yesterday, I shared my real estate experience with a young client who wants to own a business and do real estate investing at a young age of 27. Call 408-854-1883 or email me at motherhealth@gmail.com to map out your wealth plan.