I hadn’t planned on doing this post until later on in my YouTube channel and blog series, but I think its an important topic to discuss sooner rather than later, because of the combination of the market we are currently in, combined with where I think the market is going to go.
In today’s post, I want to talk about long term wealth.
Now, let me preface this with the fact that I am not a financial advisor, and all the information expressed here is solely my opinion as a result of my own research. Before making any financial decisions, you should do your own research or speak to a professional financial advisor.
Planning for the long term is just as important as hustling in the short term.
As I am writing this (December 2020), Joe Biden was recently elected as the next President of the United States.
Election years always have an interesting impact on the market, but this year has been especially interesting due to the combination of the election, along with the coronavirus pandemic.
With that being said, if you prepare for it now, you can benefit from it immensely.
Let’s go back to economics 101.
The economy isn’t complicated. On the contrary, it’s quite simple.
There’s a great 30 minute video by Ray Dalio, one of the most successful hedge fund managers in the history of the United States, that breaks it down into an extremely simple and effective way.
Long story short, it’s about supply and demand.
Look at what’s happening right now. We’re about to have a shift in government administration when the Biden team comes into office. We’re in the middle of a global pandemic. The unemployment rate is at record highs.
It sucks. For a lot of people. But, you can’t have dark without the light. And, if people can position themselves right, then there is potential for massive upside in the long run.
In Ray Dalio’s video, he explains that the economy is just a cycle. And it’s true.
America isn’t just going to vanish into thin air, and neither is it’s economy.
So if you can take advantage of the low time in the market, it can yield large gains down the road, because eventually — maybe a few months, maybe a few years — but, eventually the market will recover and will continue to grow.
So, let’s take a look at a few markets I personally am either starting to invest in, have already invested in, or am investigating to potentially invest in soon.
The industry I am beginning to invest in right now:
Now there are several reasons why they won’t go back up as far as they were…
For one, it was dependent upon who won the election.
While Trump allowed for the expansion of fracking, which increased the supply and value of oil companies, Biden wants to stop the expansion of fracking. He doesn’t want to completely rule out, but he does want to stop any more new drilling.
The reasoning behind this is important.
It’s about the environment and clean, sustainable energy (which we’ll get into).
This will have a two fold effect.
Because Biden won, that means we will continue to pursue clean energy. The first thing this will cause, combined with the ending of fracking expansion, is oil use to go down as green energy increases.
Less demand and more supply equals lower value, so oil prices will fall, eventually, over time. Maybe 5 years, 10 years, 20 years. But it will be within our lifetime. If you look at the chart above, it’s been steadily declining over the last few decades anyway.
BUT, that being said, that downslope will continue to be over time.
So why does this matter right now?
Right now, we’re still very reliant on oil as a country. And we will be for the foreseeable future. The fact that oil is at its lowest right now in history means that you can buy it for cheap, and sit on it.
Chances are, it will go back up. Maybe not to it’s previous highs, but it will go back up.
As we recover from the pandemic, the unemployment rates drop and people go back to work, there will be more cars on the road again, thus higher demand. With Biden in office, and fracking expansion cut, this will slow down supply. Increased demand and decreased supply equals higher values.
Now, we know that there will be many businesses that maintain their teleworking setup, so not as many people will be getting back on the road. But I believe enough people will be getting back on the road, that it will make a difference and increase oil stock back to an upward trend at least for a little while.
All that being said, it leads me to my next industry I’ve been investing in for a while, and now that Biden has been elected, will only increase doing: green energy.
The world is evolving, and we have learned.
Global warming and Earth’s natural resources have maintained a continuous spotlight among people all around the world for the last few years.
It’s not going away.
Not only is green energy being sought out due to the high pollution our current energy resources produce (cough, oil, cough), but there is another reason:
Earth’s resources are finite.
It may not be for a couple hundred years, or a couple thousand…
But, eventually, if we continue to grow at the exponential rate we have, and consume more and more every year, our resources will run out as a species, unless we prepare for it now.
So, again, since the Biden campaign won the election, sustainable energy is going to be that much closer a priority for the U.S. — which means there will be a demand for it, which means the value will go up.
Biden has already said on Day 1 of his presidency, The United States will be re-entering the Paris Climate Agreement.
And, as the demand and value of green energy increases, the demand and value of fossil fuels, like oil, will decrease.
Right now, you can still get into green energy stocks for a decent price. My green energy portfolio has already increased by over 50% in just the last year.
Moving from energy to resources, that leads me to my next industry I’ve been investing in: water.
Now, this might surprise you… it surprised me.
I didn’t even know there was a water industry, but there is… and it’s important.
While water may cover 70% of the planet, fresh water specifically is not nearly as abundant… and we need fresh water specifically in order to survive.
A great documentary on Netflix called Brave Blue World (narrated by Liam Neeson might I add) goes into depth about how important our limited water supply is, and what companies and tech are doing today to try and reduce, reuse, and recycle the world’s limited fresh water supply.
Just like other resources, as the human population grows, it will become more and more in demand.
With a limited supply, it’s only a matter of time before there’s a global shortage (though in some parts of the world, there already is).
As this goes on, the companies and technologies used to hopefully help solve the crisis will become more and more valuable.
Investing in them early is the key to to gains in the long haul.
While it may seem far-fetched now to think about humans being an intergalactic species, once again, it’s only a matter of time.
Maybe 50 years, or maybe 500 years… regardless, it’s the direction we are moving.
Again, Earth’s resources are finite, and there’s only so much real estate available on our little (little being an understatement) blue planet.
Eventually, we will outgrow it.
Think of it this way: where we are in space exploration now, is where we were with the internet in the early 2000’s — in its infancy (some would even argue we’re STILL in the Internet’s infancy).
Jeff goes to explain it like this: the reason he was able to successfully build Amazon was because the infrastructure already existed when he started.
He didn’t need to worry about logistics because there was the USPS.
He didn’t need to worry about a payment system because online pay had been created.
He had the power of the internet to build a website.
If, in addition to building Amazon, he also had to build the internet, build a logistics network, and build a payment gateway, he would have never been able to build Amazon in the first place.
He needed the foundation first.
He explains space as the same concept. We may not be able to live or travel efficiently in space currently, or even in the next 50-100 years, but it is our job as the current generation to lay the infrastructure, and pave the way for future generations to build on top of the foundation we build today.
This is what he is doing with his company Blue Origin. Building the infrastructure for tomorrow’s space explorers.
And while we can’t currently invest directly into Jeff Bezos’ company because it’s not Public, we can invest in space related technology and other space related companies. As the infrastructure is built, these companies’ values will only increase.
Elon Musk, and his company SpaceX have been working to solve another space problem: getting up there to begin with.
Up until only a couple short years ago, it was ridiculously more expensive to get to space, because all the rockets up until that point had been “single use.”
So they’d spend millions of dollars, only to use the thing once, and then have it break up and be useless scrap metal after.
Elon Musk set out to solve that problem by building the world’s first reusable rockets, drastically slashing the price of admission for space access, for both government and commercial purposes.
These combined with Virgin’s Richard Branson, who is investing in making space accessible from a commercial perspective through his company Virgin Galactic, are paving the way to expanding beyond our current terrestrial home.
Getting in now is a no brainer.
It may take 30, 40, 50 years… but getting into this industry early could be the equivalent (or greater!) of investing in Amazon when it first went public…
Which, if you had just invested in just 100 shares of Amazon when it went public in 1997, at $18 a share (so $1800 total) — it would be worth over $2.3 million today.
That’s a nice chunk of change to leave to the kids or grandkids.
This one is a little controversial, but when it comes to my finances, I don’t care about controversy. I care about facts, numbers, and logic.
And let’s be honest and logical, you may not like it, but it’s here to stay and only expanding more and more as the years go on.
As of 2020, despite weed being “federally illegal,” marijuana is recreationally legal in 15 states, and medically legal in a whopping 35 states!
Eventually, the federal government will catch up, legalize it across the board, and begin taxing it as a new revenue source. The states doing that already have seen skyrocketing numbers of sales, and thus have produced millions of dollars in tax revenue from it.
It’s only a matter of time before it’s considered just another vice, like alcohol or cigarettes.
And when that happens, you’ll wish you had invested in it early, when it was pennies compared to what it’ll be worth in the future.
Last but not least, this is the market I am currently paying attention to (but have not invested in yet) as I’m writing this in November of 2020.
With millions unemployed due to the coronavirus pandemic, or teleworking at least, there are a few things I predict are going to happen:
The first: I think we are going to see a large real estate crash come spring of 2021. Maybe not the entire real estate market, but at least the commercial real estate market.
Since the pandemic shut down the entire country, forcing many companies to move to teleworking as an alternative means of work, the companies have realized a few things: why keep commercial real estate, when many of their employees have been as equally (or even more) productive since working from home?
Productivity and efficiency has gone up or stayed the same, while costs like utilities have gone down since office space hasn’t been being used.
That’s one spot they’re saving money.
In addition to that, having employees work from home also means they’re most likely using their own internet, their own utilities, their own computer equipment, all costs that companies could scratch from the books by continuing to promote teleworking.
This happening across the board, in my opinion, is going to have a lot of companies giving up their commercial rental spaces, to also shed themselves of hefty rent bills.
As commercial real estate owners start to struggle to keep their spaces rented, they will either start going bankrupt or start trying to sell. This will cause more supply than demand, thus making commercial real estate prices drop.
In addition to the commercial real estate market, I am anticipating at least a minor drop in residential real estate as well.
The government sent out one stimulus so far, but who knows if and when we will see any others. Even if we do, a single check or two over the course of several months isn’t worth much, especially considering many people live paycheck to paycheck.
I think come spring, we’re going to see a lot of those who have been unemployed for an extended period of time, either losing homes due to foreclosure… or, those who were renting that weren’t able to pay their rent, will be the domino that forces many landlords to sell their properties due to the income not coming in that they need in order to pay the mortgage.
Even with the government’s assistance, they won’t be able to stop it all from happening. So if anything, I think we’ll see a minor fall in the marketplace.
So why do I bring this up?
Like I said, this is one I’m paying attention to.
The entire process of investing can be broken down into 4 words: buy low, sell high.
If you watch the video I mentioned above by Ray Dalio, you’ll learn that this is just going to be another cycle in the wheel, which means eventually, whether 2 months or 2 years, the market will rise back up.
So, I’m watching for the market to drop significantly.
When it does, look at it as “stocks going on sale” — buy up what you can, and sit and wait… patiently.
Give it a year or two, and chances are in your favor that you’ll see better than average returns on investment.
So, where can you go to invest?
I use an app on my phone called Stash — it’s awesome, and perfect for newbies, beginners, or anyone interested in learning about investing!
They offer what are called “fractional shares” which means instead of having to buy entire stocks (or ETFs, which is what I invest in), you can buy fractions of stocks — this allows you to invest small amounts, and small amounts invested consistently over time yield great results.
The best part is I have all my investments set up to be automatic. So I don’t even think about it.
I have automatic investments set to every Monday, going into roughly 25 different ETFs and industries. It comes out of my bank automatically, so I don’t even have to think about it.
They also have great educational tools, so you can learn about the process before doing any investing.
Tony Robbins talks about the importance of long term investing and compound interest over time, and tells a story about a mailman who never made more than $14,000 his entire career.
But because he invested on a monthly basis for the latter half of his career, combined with compounding interest, when he finally retired, he had accumulated over $70 million dollars.
The earlier you start, the better off you’ll be! But it’s never too late.
If you’d like to check out Stash, you can use my link to get a free $20 when you sign up and add your first deposit. I’ll get $20 too, so if you do, I appreciate it!
Do you have some additional insight on what I’ve talked about above? If so, please feel free to share in the comments or on social media, and if this article gave you value, please be sure to share it as well!