NATALI MORRIS

Natali Morris Blog

November 6, 2015

Forget The Nest Egg! The Fundamental Shift You MUST Make About Your Investment Strategy

Nest Egg. We have all been taught to save our money in order to build a Nest Egg. But I am sorry to tell you that this is the absolute wrong way to think about finance. Forget the Nest Egg! If you want to build wealth, you must think in terms of a Nest Goose.

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No matter how many eggs you put away, your retirement fund will probably not be enough. Your fund will suffer from deflation and your standard of living will suffer as a result. The average 401(k) balance at retirement is less than $200,000. If you want to live a vibrant life for 20-plus years after retirement, is that enough? That’s $10,000 per year! That is not financial freedom in this country.

So if aggressive savings is not the answer, what is? The answer is the Nest Goose! A goose is a PERFORMING ASSET that will continue to make money for as long as you own it. This was the main principle of the book Rich Dad, Poor Dad, a cult classic in the personal finance world. You don’t want a PILE of cash. You want a STREAM of cash! This is such an important distinction!

The finance industry would have you think that dividend-producing stocks, bonds, and funds are the only performing asset game in town. They’re not. There are many types of performing assets. Real estate is the favored asset in my home but here are a few other ideas:

My point is this: If you don’t start to think about buying performing assets now, you will find yourself with a finite amount of money in a savings account at retirement, wondering how to stretch it like Silly Putty. You should be saving your eggs, yes. But you should be saving them to buy Performing Asset Geese slowly but surely while you are still working!

My husband is on a mission to acquire 2-3 rental properties per year. The man stresses me out but we have been able to do it because of his good job and dog-with-a-bone mentality. This has stressed our cash flow considerably and I won’t pretend there haven’t been arguments with me pleading him to slow down. Nevertheless, we have been able to acquire nine single-family homes in the last five years. All of them are rented. All of them are respectable geese, providing good homes for other working families. We are proud of that but I don’t recommend acquiring geese at this breaknecking pace. Slow and steady wins the race too.

Next week I will write about how we find real estate investments that we are able to pay off so quickly. It isn’t magic and it isn’t illegal, I promise. But before I end, let me leave you with one last success story about a Nest Goose.

In the 1960s my grandparents used their savings to buy warehouse buildings near Oakland, California. There was a mortgage on them but the loan was paid off in the late 80s. Businesses pay rent to operate out of those warehouses. My grandparents lived comfortably off of that rent until they died and now my father and his siblings collect that rent. Those geese have been laying eggs for two generations. That my friends is true generational wealth!

Thinking this way can be uncomfortable since we have all been taught that we would be okay if we just socked away enough money. It is also uncomfortable to spend the money in your savings accounts to buy performing assets because they are expensive and they take a HUGE leap of faith! This is also why so many of you were uncomfortable with my post about borrowing from a 401(k). You want to believe that the 401(k) will be the cash cow that saves you in retirement. Most likely it won’t be. Not unless you find a way to turn it into a performing asset sooner rather than later.

My next post will be about acquiring rental real estate and doing it with your net worth in mind. Click below to subscribe to my newsletter so you won’t miss it!

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11 responses to “Forget The Nest Egg! The Fundamental Shift You MUST Make About Your Investment Strategy”

  1. Dave says:

    Thank you for the insightful post. Funny, I received my biweekly check today and moved over x amount to my "nest egg" before seeing your post. I went to the "nest egg" fund and went "hmmm, what could I be doing with money instead." And yes, you need enough to cover expenses for…what does Suze Orman say….6 months to a year? I have more than enough of that. But its a hard habit not to continue contributing. I have a pension plan with work and a 401k plan as well. I’m in my 30’s and feel that I’m selling myself short with this cash in hand. But as you said, its uncomfortable. But I appreciate you bringing this topic to light and sparking some ideas. Some of your bullets are interesting, but know very little about it. Guess I should do a little more homework. Thanks again!

    PS: Huge fan since the Buzz Out Loud Days! Any thoughts of a Tom Merritt, Mollywood reunion? Forget the reunion, just bring back BOL! :)

  2. Curious says:

    Why is investing in a small business (high risk, high reward) preferred to investing in the stock market (large businesses, ability to diversify thereby potentially reducing risk)?

    • Natali Morris says:

      If you think I was presenting these ranked, I apologize. These are just alternatives, not better or worse. You have to invest where your comfort level is. In our house, we are comfortable with single family homes. But also we prefer investments that we can effect and the stock market is certainly not one of those! Make sense?

  3. Bryant says:

    Good post Natali. This has been one of the topics that has been on my mind these recent years as I slow transition out of starting a new job into starting a family.

  4. Skeptic says:

    Retirement planning is about long term financial security. High risk, high reward alternatives have — high risk. Real estate is a boom and bust part of the economy and more have gone bankrupt in the down times (particularly when highly leveraged) than have made and KEPT fortunes. Have a diversified and balanced low fee retirement portfolio geared to years to retirement and designed to provide a secure old age. Use other money to try and make a fortune. Most small businesses (of all kinds) FAIL and flipping houses or buying homes, particularly distant ones, to rent, fail more. Recommending a small business as the financial savior for folks with no experience and skill in them as a way to provide for retirement will leave most worse off than the small amount now set aside by the majority.

  5. TB says:

    If your 401k has a balance of 200k when you retire, you did not contribute enough while you were working, or you were paying too much in fees, etc. I would guess that most people have a budgeting and saving problem as opposed to earning too little in interest/returns.

  6. PhredE says:

    But I am sorry to tell you that this is the absolute wrong way to think about finance.
    ‘But I am sorry to have to tell you that this is the absolutely wrong way to think about finance.’
    Fixed :)
    Yep; stock versus flow.

  7. Hi! I just listened to you on the podcast “Listen Money Matters” and loved your ideas of cash flow and the “Nest Goose”. I’m now going through your past posts and catching up. I’m liking this article. I’m now trying to think of ideas in terms of perpetual cash flow. Ther are so many ingenious ways to produce those flows, I wonder what are some of “the best” / time effective? Thanks for sharing with us.

  8. […] That is what I have promised to share with you so share I will! Real estate is our main form of Nest Goose investing in our house so I want to share how we do […]

  9. Its good as your other blog posts : D, thankyou for posting. “Experience is that marvelous thing that enables you to recognize a mistake when you make it again.” by Franklin P. Jones.

  10. This post have resolved our problem,thanks very much and hope you writting more good articles.

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