Which Level of Investing Are You On?

We all want to become financially free. But how do you actually get there? Most financial planning books are great at telling you the perfect plan for becoming financially free. Unfortunately, life isn’t perfect, and it rarely goes according to plan. How can the rest of us plan for our future?

Like A Boss.

Photo by Tom Wolf (Creative Commons)

Most financial planning books are focused on which financial vehicles you should be investing in. For example:

  • 401K
  • Stocks
  • Bonds
  • Mutual Funds
  • Gold
  • Real Estate
  • Your Small Business

Most people invest in some of these. You probably have many of these investments yourself.

When you’re at this stage, we consider you a Level 2 Investor. You’re making investments for your future, but those investments are probably not paying you back much yet, and you’re not in a place that you’re financially independent, where you can live solely off your investment income.

The Three Levels of Investors

3 Levels of InvestorsFinancial experts say that if you stay disciplined and make good investments, you might be able to graduate from Level 2 to Level 3.

Level 3 investors go from being earners to givers. At this point, your assets are earning enough money that you have financial freedom. You can begin to invest in a purpose beyond money, your true passions, whether that looks like donating your time and money to charity, starting your own business, or just spending time with your family.

We all want to make it to Level 3. More than just the peace of mind of financial independence, there’s something about living generously that’s deeply appealing. But how do you get there? How do you become financially free?

The Big Problem Most Investors Don’t Know

Most experts will advise you to invest invest invest, but what happens if the unexpected strikes? What happens if one of the five thieves we’re going to discuss in this book come and steal your financial future?

Here’s the Big Problem: If you focus solely on these three levels, as most financial planners are taught, your investments might pay off if life goes according to plan. The problem is that life almost never goes according to plan.

You could do everything right, do everything that your investment advisors and financial planners tell you to do, and then lose everything in less than a year. I’ve seen personally how quickly life can reverse its fortunes. I’ve also found that most people are working hard on Level 1 and Level 2, but they leave themselves open to huge amounts of risk. To put it bluntly, if you’re just a Level 1 or 2 Investor, you may be building your financial future on sand.

A plan that only covers Level 1 and Level 2, a plan that doesn’t address the foundation of financial success, runs the risk of getting completely wiped out when “life happens.” If you only focus on saving and investing without setting up your foundation, don’t be surprised if your financial home gets washed away in the storm.

My mission is to make sure this neglected foundation piece is in place. I’ve seen too many people wiped out because they built their financial foundation on shifting sand instead of solid rock.

The Core Investment Level

Core Level InvestorBesides the three levels of investing, there’s a Core Level that most people ignore. You can see the Core Level in this chart. 

Most people are doing pieces of Level 1. Some are even up to Level 2. However, we’ve found that very few people know how to create their financial foundation, and it leaves them open to the risk of the five thieves discussed in this book.

However, just because we focus on the Core Level, don’t misunderstand our intent. We’re here to make you a Level 3 Investor. In order to do that, you need a strong foundation, one that can survive anything that life throws at you. We don’t want you to get taken out of the game before you accomplish your goals.

Most financial planners are taught to focus on Level 2. Even I was taught that way. However, common knowledge leads to common results. If you want to do something everyone else is doing, feel free to focus on your Level 2 investments without setting up a financial foundation, your Core Level.

On the other hand, if you want to earn more, pay fewer taxes, and achieve peace of mind for your future, then you need to start building a solid foundation.

Learn more about how to build a solid financial foundation by downloading our eBook, 5 Thieves That Will Steal Your Rich Life. Learn more about the book and get it free if you subscribe for updates here.

How about you? Which level of investing are you on?

About Beau Henderson

Hi, I’m Beau, and I’m the author of The New Money Mission. My goal is to help you move toward your Rich Life, and to help you create a strong financial foundation for your future. Click here to learn more

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