Achieving Financial Independence and Mental Clarity with the Power of Ikigai: Paul Thompson

August 16

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Financial Independence through Investing is a journey, not an overnight success.

The path to financial freedom can be complex and intimidating for many people.

Reaching financial autonomy can be a dividing line between those who expend their days toiling away and those who relish the rewards of judicious investing. But if you’re unsure about how to navigate this investment landscape, reaching that coveted level of independence may seem unattainable. However with the right mindset and strategy, suddenly this becomes much more attainable.

In this episode of “Name Your Number” with host Steven Pesavento, guest Paul Thompson explores the power of finding one’s purpose and igniting passions. Thompson shares his insights on how to navigate the path towards independence, investing, and creating alternate income streams.

He also introduces the concept of Ikigai, a Japanese term for discovering one’s purpose in life. Thompson’s personal journey from the corporate world to entrepreneurship provides valuable lessons for listeners.

Table of Contents:

The Power of Purpose in Personal and Professional Life

Understanding one’s purpose is like possessing a compass for the journey we call life. It acts as an anchor during turbulent times, providing much-needed stability and direction. A well-defined purpose not only assists individuals in overcoming challenges but also shapes their actions and decision-making processes.

This striking statistic underscores the significance of personal fulfillment over societal expectations or materialistic pursuits.

Finding Your North Star: The Role of Purpose

Your ‘North Star’ or ultimate goal can be uncovered by identifying your true purpose in life. This serves as your driving force each day, propelling you towards more than just financial success or social status.

Purpose ignites passion, fuels determination, fosters resilience amidst adversity, aligning professional endeavors with personal values and passions, leading to genuine satisfaction from work while contributing positively to society.

The Interplay Between Purpose And Decision-Making

Incorporating our core beliefs into daily decisions leads to fulfilling outcomes both personally and professionally. When choices reflect aspirations, we are likely to feel contented with the results, regardless of external circumstances. This approach encourages us to prioritize long-term happiness over short-term gains, which are often overlooked when making key decisions under pressure or amid uncertainty.

Transformative Power Of A Well-Defined Purpose In Business

In business settings too, clarity about organizational purposes proves instrumental in shaping strategies, fostering innovation, and enhancing customer relationships. Companies guided by a strong sense of purpose are better equipped to navigate market disruptions and maintain high employee morale throughout these challenging periods. Such businesses tend to survive and thrive even during economic downturns because they have invested time in identifying a raison d’etre beyond profit-making. This enables them to effectively engage with stakeholders, building trust and equity that are essential for sustainable growth.

Key Thought: Grasping your life’s purpose acts as a compass, steering you towards fulfillment and shaping decision-making. It fuels passion and resilience, aligning personal values with professional pursuits. In business, a clear organizational purpose navigates disruptions while fostering innovation and customer relations – the key to sustainable growth.

Ikigai: A Japanese Concept for Discovering Your Purpose

The exploration of Ikigai, a concept hailing from Japan, provides an enlightening framework to unearth one’s purpose in life. This method encourages individuals to delve into their past experiences and passions with the aim of discovering what truly motivates them.

Understanding the Four Elements of Ikigai

Ikigai is constructed around four key elements – your passion (what you love), vocation (what you excel at), mission (what the world needs), and profession (a means to earn income). The convergence point where these four components intersect signifies your ‘Ikigai’ or reason for being.

Your passion can be linked with activities that provide joy and satisfaction. It could range anywhere from creating art pieces to solving intricate mathematical problems. Recognizing this element requires introspection about those activities which make time seem irrelevant when engrossed in them.

Vocation refers to skills or talents developed over years through education or experience. These are areas where others may seek advice due to its mastery by you over time.

This involves understanding how individual actions contribute towards making a positive impact on society as a whole, aligning closely with societal contributions – identifying issues within society that need addressing falls under this category.

Finding Your Unique Intersection Point

To discover one’s unique intersection point among these elements might require some initial exploration, but it brings clarity once found according to a Forbes report.

It’s important not only to recognize each element separately but also to appreciate how they intertwine, forming a cohesive unit leading towards fulfilling life goals.

Incorporating all aspects equally ensures a balance between personal desires, achieving financial independence, and contributing positively towards societal obligations, fostering harmony within oneself, paving the way for happiness and contentment throughout the journey.

Remember, discovering ‘Ikigai’ isn’t an instantaneous process but rather unfolds gradually, requiring patience and perseverance along the path of self-discovery, providing a rewarding outcome at the end of the journey.

Key Thought: Discovering your ‘Ikigai’, the Japanese concept of life purpose, requires introspection and patience. It’s about finding where passion, vocation, mission, and profession intersect. This journey not only brings personal fulfillment but also aids in achieving financial independence while making a positive societal impact.

Financial Independence through Equity Ownership

The journey towards financial independence can be significantly streamlined by owning equity in asset classes such as real estate or stocks. This investment strategy offers the dual benefits of autonomy and residual income, along with the potential for wealth growth.

Achieving financial autonomy is not a simple task; it necessitates careful strategizing and wise choices. Nevertheless, numerous investors have successfully achieved their financial independence number, demonstrating its attainability.

Real Estate Investment: A Pathway to Wealth

Taking the plunge into real estate investing could prove to be one of your most rewarding decisions on your path toward achieving financial independence. Real estate investments offer both immediate rental income and long-term appreciation that can substantially increase your net worth over time.

To kickstart your venture into real estate investing, consider buying properties in emerging markets where property values are projected to rise or invest in established areas known for consistent rent prices. Additionally, you might want to explore REITs (Real Estate Investment Trusts), which enable individuals to invest indirectly in large-scale revenue-generating estates without having direct ownership themselves.

Bonds & Stocks – An Avenue Toward Passive Income

In addition to real estate investments, there lies another avenue towards building wealth: Bonds & Stocks. These dollar-denominated investment-grade fixed-rate debt issues reflect actual investment results from companies across various sectors globally while offering passive income opportunities via dividends or interest payments respectively.

This type of investment requires less active involvement compared to managing physical assets like properties, making them ideal for those seeking a more hands-off approach towards investing. However for those who want the ‘real’ in real estate with the ability and means to do so, we of course, recommend investing passively into Multi-Family if you meet accredited investor status.

Leveraging Time In Investing

The significance of time cannot be overstated when discussing successful strategies used by investors worldwide. Long-term investments capitalize on compound interest over time, famously referred to as

Key Thought: Securing financial independence is achievable through smart investing in equities, real estate, and bonds & stocks. This journey demands strategic planning and informed decision-making but offers autonomy, residual income, and wealth growth. Remember: time is a powerful ally when it comes to compound interest.

Mastering the Five Pillars of Investing

The path to financial independence through investing is often built on five key pillars: time, money, knowledge, network, and the project or deal itself. Understanding how these elements interplay can significantly boost your investment performance.

Leveraging Time in Investing

Investments are a long-term game where time becomes an invaluable asset. It’s not just about when you start but also how long you stay invested that counts. The magic of compound interest grows stronger with longer durations.

A study by Fidelity’s Viewpoint underscores this point brilliantly – An investor who begins saving at 25 will have amassed more wealth upon retirement than another who starts at 35 even if they invest identical amounts annually.

This principle underlines why it’s crucial to begin early and practice patience for achieving desired retirement expenses expressed by historical market averages.

Utilizing Networks for Investment Opportunities

Your personal and professional networks play a pivotal role in unearthing promising investment opportunities. These could be friends, family members as well as colleagues or industry peers.

In a recent survey, successful investors shared their experiences leveraging networks effectively to find lucrative deals off-market.

By tapping into these hidden markets, they were able to achieve superior returns compared against traditional dollar-denominated investment-grade fixed-rate debt issues or actively traded common stocks reflected in total market index benchmarks provided by Standard & Poor’s Financial Services LLC (S&P).

The Challenges and Rewards of Entrepreneurship

Embarking on the entrepreneurial journey is akin to navigating a labyrinth. It presents an array of challenges, yet holds the promise of substantial rewards for those who successfully traverse its twists and turns.

Risk forms one cornerstone when embarking upon entrepreneurship. Statistics indicate that around 20% of small ventures do not survive their first year, while only half manage to sustain beyond five years. This could be attributed to various factors such as insufficient capital or inadequate management skills.

Besides these internal hurdles, entrepreneurs also grapple with external impediments like stiff market competition and stringent regulatory norms, which can pose significant obstacles during their venture journey.

Precognition towards these challenges allows individuals better preparedness before setting foot into this arena.

Celebrating Triumphs: The Rewards Offered by Entrepreneurship

Apart from posing formidable challenges, entrepreneurial endeavors offer numerous rewards, making them attractive propositions for many risk-takers out there.

Owning your own business provides unparalleled autonomy – you are at liberty to make decisions without needing approval from superiors or stakeholders.

Beyond this freedom lies potential wealth creation opportunities unrivaled by traditional employment routes. Successful entrepreneurs have amassed considerable fortunes through innovative ideas meeting favorable market conditions – demonstrating what’s achievable when creativity meets opportunity head-on.

Apart from monetary benefits, though, there’s also personal satisfaction derived from building something meaningful from scratch; seeing your vision come alive; knowing that your product/service makes a difference in people’s lives – all contribute towards making entrepreneurship an immensely rewarding pursuit despite its associated risks.

This balance between risks and rewards forms part and parcel of every entrepreneur’s life cycle – understanding them both helps set realistic expectations while pursuing one’s entrepreneurial dreams.

Key Thought: Entrepreneurship is a high-stakes game of navigating through a labyrinth, fraught with risks like market competition and capital shortages. Yet, it’s an enticing path that promises autonomy, wealth creation opportunities, and personal satisfaction for those brave enough to tackle its challenges head-on.

Investing in Yourself – The Initial Step Towards Achieving Financial Independence

self-investment. Dedicating your efforts, energy and assets to personal advancement is a must for self-investment.

Educational Pursuits as an Investment Strategy

An integral aspect of investing in oneself lies in education. Continuous learning allows you to stay ahead amidst the rapid advancements of today’s world. Whether through traditional educational institutions or by pursuing knowledge independently, expanding your skillset can unlock profitable opportunities.

Beyond academic pursuits, real-world experience holds significant value as well. Practical experiences offer insights that theory-based studies often miss out on, making internships or part-time roles related to your field worthwhile investments.

Prioritizing Mental Health & Well-being

Mental health significantly influences productivity levels and overall quality of life. Investing time in activities that promote relaxation and stress relief contributes positively towards achieving desired retirement expenses expressed through effective tax rate-based savings. Regular exercise routines for physical fitness and meditation practices for mental clarity are crucial components in maintaining optimal performance in work and business ventures alike.

Skill Enhancement & Networking Opportunities

In addition to education and well-being, enhancing specific skills relevant to career goals forms another key aspect of self-investment. For instance, if you aspire to be a successful entrepreneur or investor, mastering negotiation tactics would prove beneficial. LinkedIn Learning offers various courses tailored specifically for professionals looking to venture into entrepreneurship and investment fields.

FAQs in Relation to Financial Independence Through Investing

How do you reach financial freedom through investing?

You can achieve financial independence through investing by strategically investing in assets like stocks, bonds, and real estate. The goal is to create a portfolio that generates enough income to cover your living expenses without depleting the principal investment and keeping it diversified to mitigate risk.

How much do you need to invest to be financially independent?

The amount varies based on lifestyle, but many follow the 4% rule of FIRE (Financial Independence Retire Early) which suggests having investments worth 25 times your annual spending.

What is the fastest way to achieve financial independence?

Rapid wealth creation often involves entrepreneurship or high-risk/high-reward investments. However, it’s essential to balance speed with sustainability for long-term financial independence.

What is the 4 rule in FIRE?

The 4% Rule, part of FIRE strategy, posits that if you withdraw only 4% annually from your retirement savings, there’s a high probability it will last indefinitely.

Conclusion

Having a clear purpose in life is more than just living for yourself, it’s about finding your Ikigai.

This Japanese concept helps you discover what truly motivates you and drives your actions.

But that’s not all. Financial independence through investing can be achieved by owning equity in assets like real estate or stocks to build up a neat retirement income. You can also diversify your traditional IRA into real estate

The key to successful investing lies in mastering the five pillars:

  1. Time
  2. Money
  3. Knowledge
  4. Network
  5. The Project/deal itself.

Becoming an entrepreneur has its challenges but also rewards such as autonomy and potential wealth creation.

It’s all part of the journey towards financial freedom.

To create wealth, it is essential to invest in yourself first.

Your personal growth sets the foundation for wealth creation.

If you’re ready to invest into yourself and begin your journey towards achieving financial independence through investing – a great start is to work 1-1 with Steven on a High Performance Coaching program.  

Achieving Financial Independence and Mental Clarity with the Power of Ikigai: Paul Thompson Transcription:

Paul Thompson [00:00:00]:

have something that is yours that can't be easily taken away from you and earns you a residual income and has appreciation potential and the the opportunity to grow real wealth and then control what you wanna do. And then you can do what matters most to you.

Steven Pesavento [00:00:12]:

Yeah. And it's like from that place, when you step into the mindset of an investor, you're not just working for an income. You're working for the growth of that equity. Welcome back to the name your number show presented by the investor mindset. My name's Steven Pessavento. And today, I have Paul Thompson in the studio. How you doing today, Paul?

Paul Thompson [00:00:31]:

doing great. Look, looking super forward to having this conversation, Steven.

Steven Pesavento [00:00:35]:

Yeah. I'm excited to have it as well because I feel like you and I are two people who've kind of had a discovery early on that what we were doing wasn't necessarily fulfilling us and that maybe there was more to life. Right? And, you know, you left the corporate world and, you know, I went and did the same and kind of went on this entrepreneurial journey. And although there's many different journeys you can go on, it's the one that we chose. And you know, as I'm sitting and reflecting and thinking about, you know, what's most important in life, finding that path towards both making an impact while creating a great income. You know, it can be challenging because as you go out and you be an entrepreneur and you run your own business and you hire people and you start doing the work, you know, it can end up being a little tiresome. You know, we trade 1 set of problems for a new set of problems. Yeah. Oftentimes, they are better. Right? But it's all about that perspective. So kind of starting off, I'd love to know what perspective do you carry in life when it comes to the work that you're doing, and how do you keep yourself engaged and excited as you're on that path getting closer and closer to your dream and your vision?

Paul Thompson [00:01:45]:

Well, I think that's it. It's it's having a dream and a vision that gives you purpose. It's having a a a worthwhile goal to strive for and so much of whatever you're doing in life it is not so much the achievement that makes it worthwhile. Although that's certainly nice, it's the person that you have to become in order to be capable of achievement. And and so let's maybe make that a little more practical. you know, some somebody listening to this right now, they're they're in the middle of a a valley in life. Like, they're they're having struggle And you and I have certainly probably had our own struggles that we could talk about. And we're all gonna have that moment where it was like, just don't know why why we're doing this. Is this worth it? And in those moments, you need to have something that is your, driving purpose. and not just a passion. You know, I I don't talk passion and purposes are different things. And I'm talking about something that's that's purpose. I wanna make an impact. I I wanna really connect with people. And I want to, see the light bulb go off over their their eyes or over their head and see their eyes light up when they find their thing that they're made for. Like, they're they're just encoded to be an entrepreneur, to be a developer, to be, you know, some people are are, like, an accountant. Like, that's okay. You know, it doesn't have to be a a a sexy socially accepted and sexy thing. If your purpose is your purpose, then you can get through those valleys in life. And I think that's what we need to come back to. And there's a a saying that I'm gonna paraphrase. Uh-uh, I think it was attributed to Mark Twain, but, you know, like, half of quotes on the internet are attributed to Mark Twain. but there's this notion of, like, there's the the day you're born, and then there's a day you realize why you were born. And when you find the reason why you were born and the thing that you wanna do, than what needs to be done becomes much more obvious.

Steven Pesavento [00:03:50]:

Yeah. And it's from that place that all of the great things in our life start happening and all the things that kinda led up to that moment, they give us the skills, the experience, the knowledge, all of the things that allow us to then step into that purpose, step into that next chapter. And yet it can be scary. It can be a little bit frightening because there's a lot of unknown. There's lot of uncertainty in that place. So for you personally, Paul, how did you discover and define what your purpose is or the purpose that you understand today?

Paul Thompson [00:04:25]:

so there's this, concept in from Japan called Ikagai. Have you ever heard of this? Mhmm. Eke guy. and then there's a series of questions you can ask yourself. It's called your Eulary and Destiny. And I I I'll do my best to get them right, but there's a there's a series of questions in the overlapping VIN diagram of the answer. It helps inform your purpose for doing something in the world. You're like, what were you around most of, like, when you were a child? What are the things that you're, you can talk about endlessly without any preparation? like, well, what are the things in life you're most curious about? And when you start investigating some of those questions, then it helps inform you that, okay, this is my thing. Like, this is how I find the the discipline of life that just really fires me up, and I don't have to go and revitalize myself. So for me, I have found that when I learned something, I cannot help, but to go and teach it to somebody else. And I I wouldn't say I I as ever aspiring necessarily to be a teacher but I like information, and then I like sharing that information because it's one way for me to help re reestablish and reaffirm what I think I know. It helps me challenge. When I say it out loud to somebody else, it helps me challenge what I've conclusions I've drawn. and I just cannot help but do that. I've done that ever since I was in grade school. I would learn something in class, and I would be the guy on the side trying to help somebody else learn it because that's just what I've always done. and that's just some, for whatever reason, an aspects of my personality. And so when I learn about real estate, I learn about, entrepreneurship. I just cannot help myself, but to try and share it with somebody. whether it's for a profit or just because it's fun, I just find myself in front of an audience. usually a small intimate audience is where I I I I thrive, but I am in that environment trying to share information. And so I just collect big ideas and share them. That's kind of my purpose.

Steven Pesavento [00:06:32]:

Yeah. And so it's so interesting, right, because it's simpler than it sounds

Paul Thompson [00:06:36]:

-- Yeah. --

Steven Pesavento [00:06:37]:

to be able to figure these things out but oftentimes it can feel overwhelming trying to discover, like, what is it that I'm actually here for? And when we put so much pressure on making sure that it's right, making sure that we know every little detail, kind of going into that perfectionist mindset, it often can take away from the energy, from the juice from the benefit of discovering what that thing is that's right for sand, you decide how much you need to live the life you wanna live, it opens up so many more possibilities because the only way that you can actually fully draw that line in the sand is to start discovering more about yourself, discovering more about what you're meant to to do, what your life is going to be about, and what excites you. Right? And I loved what you talked about there, that curiosity, you know, the curiosity of the thing that you're already excited to talk about, excited to do. Right. You might be passionate about it. You might just be interested in kind of on this ever path of learning. And then for you personally, you've found a way to kinda pull that back and be able to share that with others because that's what lights you up. Right. When you've talked to other folks and you've worked with other people kind of going through this process of that discovery, what are some of the things that you've noticed that are similar or what are some of the other examples of of things that other people, not yourself, have been drawn towards when it comes to what kind of they're they're here to do?

Paul Thompson [00:08:15]:

Right. so I have a business partner that's lives in Dallas, the Dallas area, and his zone of genius is his thing is he just really likes having with people. He's just a really sociable guy. Like, he's really good at connecting people, and he's, like, everybody just likes seeing. Like, he just can effortlessly talk to a stranger about. And and they can even be can say pretty nasty things to him, and he just laughs and says, yes, and and just continues talking to that person I mean, I've I've been in in front of town councils, for a development project where the the city council was, very uncooperative to to our to our, what we wanted to do. And then afterwards, that the lady came and talked to us and was telling us about all the reasons why what we're doing is bad for the city. And and it was a a kind of a funny moment, but it's also kinda stressful. and my personalities to say, well, here's why you're wrong. And I wanted to, like, list off the reasons, and he's so much better at that. He he they were laughing and telling jokes, and he was able to handle that situation with such grace compared to where I I would have been like, almost like a lawyer. Like, well, let me tell you how you're wrong, which would not have helped at all. And so he's an example of somebody who has a a zone of genius. There's this kind of this purpose to connect and get to know people that is just something that he is ingrained in him, and he doesn't have to work that hard at naturally being good debt.

Steven Pesavento [00:09:46]:

Yeah. And so it's once you can discover what this thing is, what is your gift, your superpower, then you can actually begin to apply that directly into your own life into the things you're doing.

Paul Thompson [00:09:58]:

And the

Steven Pesavento [00:09:58]:

truth is most of us are somewhat aware of what we're good at. Maybe we have a phenomenal voice. Maybe we carry a great message. Maybe we're curious, more learners, maybe we are very analytical and whatever that thing is that is your thing. Mhmm.

Paul Thompson [00:10:14]:

And

Steven Pesavento [00:10:14]:

then you can understand, hey. How can I apply that towards getting to the life that I wanna create, the impact, the income, the the lifestyle, all of those different pieces. So, Paul, for you in particular, I'm curious, you know, have you named your number and more importantly than the number that you named what did that process of drawing a line in the sand and then designing your life in order to be able to create that? What did that do for you?

Paul Thompson [00:10:43]:

Yeah. So I'll walk through that a little bit, because that was a bit of a process for me. you know, I had a current lifestyle in Little Rock, Arkansas. you know, I was a middle income or I'm sorry. I was I was a middle manager with a, probably, you know, a 6 figure income. And as a single income family. My wife stays at home, and we wanted to maintain that lifestyle. without me having to constantly go to work. So so so much of me about naming your number was also for me, like, naming how I spent my time. And I wanted to be able to earn a certain number for me. It was it started off at $5000 a month, and then it it it escalated to $10,000 a month. so now that I can comfortably earn $10,000 a month without spending a lot of time and effort to do so, Now I have what I would consider, a level 1 financial independence. You know, I I'm not gonna be, living in an exotic life. I'm not driving on private jet, but that's my, like, safety and security. That's my my my foundation of my lifestyle. And then I could spend time working on projects that I certainly have a profit motive in, but I don't have to win every single project And it is it just changed my life. Right? Like, I I I can I can always fall back on this this portfolio of rentals that I that I that I have that pay my my fundamental living expenses. And and that process for me was, you know, going back kinda like personal finance 101. Like, what do we really need to spend? And when I came out with a an initial number of $5000 it was probably enough to survive, but it wasn't enough to thrive, for our chosen lifestyle and really a low cost of living area in Little Rock, Arkansas. But, you know, our our kids go to private school. We've we've tried public school at every level. elementary worked, middle school, and high school for our kids that did not work. here. So we've elected to go to private school, which is ridiculously expensive. And so that modified our lifestyle, our our need to earn a little more to be able to comfortably be able to send our kids to the schools that we've filled make the most sense for us in our situation. and answers the question.

Steven Pesavento [00:13:01]:

Being in that position, being in the position to be able to know that your level 1, right, your your your basic expenses are covered and knowing that you're able to then create the life for your family. How did that feel compared to the old way? The traditional way. The I'm, you know, I'm grinding for a paycheck. I'm doing this thing, and and I don't exactly know when I'm gonna get out when I'm gonna get off the the old treadmill, as we call it.

Paul Thompson [00:13:31]:

Right. The rat race. the the feeling is is the feeling of freedom. It's the the every once in a while, your job will remind you who's really in charge. you know, sometimes you have a cool boss and they're and sometimes, you know, you know, you kinda like where your your work and your coworkers and, you know, you're you're lucky that you have a boss that you like and when that's going on, you know, you're like, this is okay. Like, I I I've I like most of what I do at work. You know, I don't hate my job. And for anybody in this situation, that's awesome. And I was in that way in that position for a while. However, you can't control the environment. And bosses change, companies get purchased, layoffs happen, and just they're outside of your control. And so you don't really have the freedom and autonomy that you that you think you have. And so you're extremely vulnerable to the whims of a of a, an of a company that's going to create some sort of cold equation spreadsheet, which I have been a part of where I would look at spreadsheets employees and we'll say, well, that one's gotta go. That one's gotta go. This one makes too much great employee, but they make too much. Now I've been in in those meetings. And, of course, those same meetings are happening that I'm not involved in when my name is on that list. That's happening in every corporation of any size. And so I think the idea of relying on a corporation or a government to take care of us is is fraught with danger and uncertainty that I think we underestimate. And and so I it's okay to be an employee, but I think it's so much better to be an employee of a small company where you really know each other. And, you know, that that that's being closer to being a a human where we were in when we were a tribal species and a group of a 150 or less is kinda like the ideal tribe size for for humanity. according to scientists. and anecdotally, that feels right to me. And when you get inside of a of a corporation that has more than a 100 employees at one site. You don't know them all. There's there's just, like, there's this weird friction where you break up into, like, subtribes and you're like, you war against each other. Anybody who's been a corporate world or government, jobs has seen that that them versus us dynamic that happens inside inside of corporations. And it's it's pile ticking. It's like, who has the control and who has the power? And and and the thing we miss is that when we're in the middle of those fights for controlling power, We have already given up our control and power by working for a corporation. So when you are able to buy back your time by creating income, outside of a job, then you can work for a company if you wish, make an income if you wish, but you don't really need that income anymore. You're you're you have your own thing that comfortably covering your living expenses. And then I think it actually makes you a better employee because you'll you're not just self serving. You're there to serve the organization you're part of.

Steven Pesavento [00:16:24]:

Yeah. And it's so interesting because I I love capitalism. I am a big fan of free markets and be able to have people be able to go out and build businesses and make an impact. But it is interesting that as companies grow, they become more efficient and sometimes effective, but not often. Right. but as they grow, you have to start focusing on specialization, meaning one person does one thing, and they do that thing over and over and over again. And that's what ends up leading to the efficiency that leads to higher profits. And as these companies grow, as governments grow, then you start getting further, further away from that community from that connection, from that tribe. You have it in a microcosm within those little groups, but it's not the same. And that's one reason I believe a lot of people are starting to be much less happy, much more anxious, because they don't necessarily feel like the direct things that they're doing in their life are leading to the changes that they're desiring from their life And so when they hear about things like entrepreneurship, when they hear about investing, they get excited because it's an idea that might get them more of autonomy, that control, that influence, being able to do something that makes more of an impact. But at the same time, there's so much uncertainty for so much uncertainty, what you don't know, leaving the security of or the pseudo security of of working in that company. And then as people do go and try to do their own thing, they recognize that they've traded one challenge for another challenge and many of those people end up leaving. They end up going back to the old way because they didn't learn the new set of skills in order to succeed in that space. So what I'm really driving towards is this idea that sometimes the grass isn't always greener, but from your perspective, how should how should I, how should the listener be thinking about getting clear on making those steps towards creating that independence so they can spend more of the time doing the things that they do really care about what they're really here to do.

Paul Thompson [00:18:40]:

I think we're all in a race to get to that number. Whatever your number is, you need to get into a a purpose, passionate, sprint to get to the place where you comfortably have that net worth or cash flow number so that you then have bought your freedom back. And the way to do that is to own equity. And so you can, earn and invest and and invest in the stock market and have equity in, you know, fractional shares of of a of a big, you know, fortune 500 type company or a public company anyway. you could start your own business. You start with a side hustle and have it grow into a business you're gonna do, you're gonna be a you can be a full on entrepreneur. You can burn the boats and build your company and hopefully you're you're playing flies before it crashes. you could and that's why I like real estate is because it it's a happy combination of the 2. Is it still a business? but it's also part investment. And, I'm not dogmatic or religious about any of those asset classes. I'm dogmatic about we each need to be owning a piece of the equity of one or all of those asset classes because that gives you the autonomy and the ability to have something that is yours that can't be easily taken away from you and earns you a residual income and has appreciation potential and the the opportunity to grow real wealth and then control what you wanna do. And then you can do what matters most to you.

Steven Pesavento [00:20:09]:

Yeah. And it's like from that place, when you step into the mindset of an investor, you're not just working for an income. You're working for the growth of that equity. You might be working at a small startup or a small company. you might be having the ability to make a direct impact and influence the growth of that, quote, investment because in this case, you're investing your time. And maybe you're taking a lower salaries. You're also investing that income potential that you're making, but you have to be very intentional about deciding and choosing the right investment or the right company to do that, or if you're gonna go into real estate or buy businesses, it also comes down to making that that kind of decision. So from your perspective and the things that you've learned, Paul, how would you go about thinking and discovering what is the right opportunity to make those investments of both your time your money and kind of your skill set.

Paul Thompson [00:21:06]:

Yeah. I think of it as kinda like the 5 pillars. And so it's time and money or kind of the intuitive ones. And then you also have your knowledge, and then you have your network. And then you have, like, your your your project, your deal, the business you're going to invest in, like, it's some sort of value creation opportunity. And when you think about those 5 pillars, you think about what do you have and you kinda rate yourself on a scale of 1 to 10 on each of those 5 pillars. And so if you are an employee and you're working full time, you know, 40, 50, maybe 60 hours a week, and all your time and energy is kind of taken up by that job and it earns you income. That's great. so you have some income. You have some money to deploy, but you don't have a lot of time. So you probably don't have a lot of extra margin in your life to deploy that time to start a business or to certainly you know, you started a full time gig. Right? So you you're you're taking the resources that you have access to and you're trying to leverage them into an ownership stake in a discipline that you're interested in. And so one of the ways you can think about, your investment strategy is do I wanna be an active or passive investor? active takes more time, but you have more potential upside. passive takes less time, but you probably are capped at a certain amount of a return in most cases. And and and you need probably less knowledge and network when you're, truly passive investor, you find there are a couple of right people to invest with or a couple of right things to invest in. and you don't have to worry about creating deal flow or creating a new business. You can just invest in the stock market. You know, it's easy to find opportunities for something to invest in. You decide if it's good or bad, but you have you have options. There's a there's a a myriad of options to choose from. And if you choose to be active, then you need to choose something to specialize in and grow your knowledge base so that you can leverage kind of some sort of information advantage that you've gathered or a skill set that you've gathered to then deploy into a business that you're actively being involved in and that takes a lot more of your time but potentially it takes quite a bit less capital. You you can potentially borrow money or, bootstrap a business and not need a lot of capital to do that.

Steven Pesavento [00:23:20]:

Yeah. And when you identify these 5 categories, I love that you've kind of laid that out. Time, money, network, knowledge, project deal, equity, whatever those kind

Paul Thompson [00:23:32]:

of

Steven Pesavento [00:23:37]:

if you can determine, well, what do I have to offer to this opportunity? Cause another example is you could come into an investment and you could put very little time and very little money into it, but you have knowledge or you have a network. And that network could could be so valuable to the company that you're gonna end up receiving you know, equity or income back for those for those interactions or those connections. but it's really important that you get clear on this piece because it's when you name your number, you've gotta draw that line in the sand, but then you've actually got to create a plan to get to the life you wanna you wanna live. And investing is a great way to be able to do that. I think, you know, when you own something that goes up in value or pays you, that's where you can start to have that recurring revenue that that, recurring passive income, if you will, that will allow you to have the option to choose what you wanna do and you wanna understand, well, what are the assets that you're working with today?

Paul Thompson [00:24:36]:

Right.

Steven Pesavento [00:24:36]:

And one thing that I would just share is the distinction from my perspective, when you're a passive investor, you're actually earning majority of the profit on those deals. You know? So your upside potential actually could be very great in relation to not spending the time, but in exchange, what you're doing is you've got the money and you're using that money with somebody else's time, expertise, knowledge, relationships, network, Right. Finding the deals, those kind of things, but you also have to have enough knowledge to know what's the right opportunity for you. So, Paul, when it comes to choosing that right opportunity, when it comes to deciding which of those things or which opportunity is the best What do you recommend, when it comes to actually saying, hey. I want to go and invest and I wanna choose that company. how do they know if it's the right company or the right fund or the right opportunity?

Paul Thompson [00:25:31]:

Yeah. And this, man, we could write, but I think we could do an entire podcast series for the next 20 years over that conversation because it's such a I mean, that that is the fundamental question is how do you determine what it's a likely return is on a given investment and what's the best, you know, risk adjusted return for your personality. So What I'll do, my my best to summarize this quickly is you you wanna choose an asset class that you have some understanding of. So whether that be the public stock market, whether that be real estate, whether that be a business, like a private business that you and private invest in privately, or you start your own business, any of these disciplines that you get into, it's it's you you want to understand what's happening. And, let's just take the to simplify the scenario. Let's say, I've decided that I that real estate wants wants to be one of the things that I wanna get into. and now I wanna decide what kind of niche or what kind of asset class that I wanna invest in. And in that case, I think what you're doing is If you're a passive investor, you're, almost certainly gonna be investing with somebody who's gonna run this this And so what you're really doing as much as in investing in the fundamental asset is you're investing in the operator. And even Warren Buffett would about this when he does investments in from Berkshire Hathaway, he's looking at management. And so you're, like, you wanna marry a good management team to a good opportunity. And the management team is usually the one that's bringing up the opportunity. So, hey. I have this, you know, real estate project. I have this business endeavor. I have this fund that I'm running. Whatever the that fundamental asset is, somebody is raising their hand and saying this is an opportunity. And so you want to you're betting on the the jockey as much as you are on the horse. because without a good jockey, it doesn't matter how good the horse or the the asset in this situation is. if the manager is not doing a good job at the the jockeiness and analysis center of this analogy is not doing a good job, it doesn't matter what the what the opportunity is. you you need your betting on the management team to do a good job and live up to the the promises of expectations that they've that they shared with you. So I think really understanding the fundamental asset class, what the what the risk adjusted return possibility are, and the the, track record and the, integrity and the aptitude of the Jockey is the are the kind of the 3 overlapping things that you're looking for.

Steven Pesavento [00:28:01]:

Yeah. That's such a great way to put it. I always talk about the importance of gaining the skills and knowledge so that you can make those right selections. Right? You have to follow the right people. You have to have the right team around you, advisors, mentors, coaches that can help you choose the right operators, the right management team, who are gonna be able to choose the right opportunity. So I think that was so well said. As we're getting close to wrapping up, I've got one more question for you. But before we go there, tell the audience, how they can get in touch with you and, you know, share any asks that you might have with my audience.

Paul Thompson [00:28:39]:

your thing. Well, I appreciate you have me on here too. It's been a lot of fun. The best place to find me is on my website, pauldavidthompson.com. that's my, it's common name. I have a cursive common name. unlike you, I have a cursive common name. So I had to use all three names to get my own domain. So pauldavidthompson.com spelled about the way you'd expect those names to be spelled, and I have the same handle, so to speak, on most any social media that's out there.

Steven Pesavento [00:29:08]:

That's awesome. Well, this has been so great, and I think this particular topic that we're talking about is so important when it comes to naming your number and creating the life you want is finding that purpose and then figuring out what the plan is that's gonna allow you to get there. So as we wrap up, what advice would you give, Paul? to the folks who are listening and they're inspired. They wanna create a better life. They want to be able to step more into their purpose. and they want to be able to earn the kind of income they they wanna earn, what would you recommend, is regards to what they can do or what they can model in order to kinda create that for themselves.

Paul Thompson [00:29:49]:

That's a good question. So when you're thinking about like, what am I gonna do now? This is, you know, this is a great conversation these guys have had, but, you know, what are my what are my actions? so I think it's fundamentally a decision that you that you have to make to invest in yourself that you're worth it, that you need to get a piece of equity into something that's going to pay you an income or has the potential for appreciation, and you need to get in the game. I spent 15 years sitting in the corporate world, hoping, dreaming, wishing, fantasizing that one day I'd figure out a way to start a business and create wealth and, kinda go for it. You know, like, like, like, get out in on the field and It's I I and I'm okay that the outcome isn't even certain. The the action that takes the the personal courage it takes to take action is the thing that's holding you back. Like, you are your own worst enemy here. And sometimes you can just kinda step outside of that that fear, the doubt, the uncertainty that's holding you back, and go for it. it's like the the greatest regret that most people have at the end of their lives is that I wish I'd lived my life for myself and not based on the status quo of somebody of somebody else. like 75% of people who are interviewed at the end of their lives say that regret, which is an absolute terrible shame. You know, as far as I know, we only get one chance at this life. and it's here for the taking and you can make of it what you will and being afraid of what may or may not happen is a far greater regret than going for it. Maybe not even being wonderfully successful, but, Alicia went for it. and you got in the game and you figured out how how to do it. And the really only failure that you have in doing that is if you choose to quit. Because we're we're very fortunate. We live in the modern world. We live in 21st century. most of us, after you're listening to this, you're probably speaking English. you're in a, a modern, first world country. Like, there's there's safety nets in place that you're in you're probably not gonna be destitute even if you don't succeed. Like, you can restart several times and go for it because if you don't, you're assured the outcome.

Steven Pesavento [00:32:11]:

Yeah. That's really, really powerful. And, Paul, thanks so much for sharing some wisdom with me and with the audience and for all of you listening. Thanks so much for joining us. And, hope you'll take some action on the things we talked about, and we'll see the next episode. Thanks for listening to the investor mindset podcast. Make sure to hit that subscribe button. And if you'd like to watch another, here's one up top, and here's another great video. right down below.



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