One credo I follow in my life is: knowledge over news.
The former appreciates and adds value to your life, while the latter depreciates and doesn’t add value.
However, even living halfway across the world and going out of my way to avoid noise doesn’t totally eliminate news from my life.
As a long-term investor in over 100 different world-class businesses, I almost have no choice but to hear a little bit of news from time to time.
One interesting theme that seems to keep popping up is this narrative that wealth and income inequality is the fault of capitalism.
There’s apparently this evil apparatus out there holding 99% of the people back.
Capitalism is being portrayed as this thing that is available in back rooms, where only those who know some kind of “secret handshake” can get involved and make a lot of money.
This incorrect idea that it’s a zero-sum game where the evil rich step on the good poor is often perpetuated by false prophets looking to somehow gain off of this, be it political or otherwise.
But ignorance is bliss. Excuses are easy. It’s not fun to look in the mirror and admit your mistakes.
Well, I’m here to tell you that excuses won’t help you. Politicians won’t help you. Reporters won’t help you.
What will help you?
Capitalism is wonderful in large part because everyone can participate.
Yes. That includes you.
Take A Look In The Mirror
This agenda that certain politicians seem to push accuses capitalism of many of the world’s ills, as if capitalism is this thing that’s only available for a select few people.
Well, that’s just not true.
Look, I found myself below broke and unemployed during the depths of the financial crisis.
It was the spring of 2009. I was just fired from my job in the automotive industry.
Living in the Metro Detroit area at the time, I almost couldn’t have picked a worse industry at a worse time in a worse place.
Being unemployed in those circumstances was, to put it mildly, terrifying. Making matters more difficult, I had almost no money. And I had student loan debt to contend with – without the college degree to offset it.
Unemployed college dropout in debt. At almost 28 years old.
Not a pretty picture.
As I’ve put it before, I was worth more as a baby than I was in my late 20s.
But I didn’t blame anything or anyone else. I didn’t make excuses. That would have been easy to do, especially considering that I grew up on welfare in a crack house in Detroit. My childhood was spent engulfed in extreme poverty and racism. I even lost most of my family, including two sets of parents.
No, I didn’t make excuses. I manned up and realized that I had made numerous mistakes over the course of my life.
There’s no invisible boogeyman named “Capitalism” that was holding me back.
The only boogeyman around was named Jason. It was me. Because I was a total idiot up until that time.
I had to take a look in the mirror in order to see what was wrong with my life.
There was the lack of effort and poor attitude at school. The wasting of an inheritance at 21 years old. Taking out debt to fund a college education that didn’t make sense for me. No focus throughout my early 20s. Constantly living beyond my modest means.
So on and so forth.
Admitting my past wrongs was the key to unlocking my future rights. It’s not possible to win unless you’re willing to lose. I had to be humble before I could be bold.
And bold I was.
I moved from Michigan to Florida in order to take advantage of a more dynamic economy, lower taxes, warmer weather, and a lower cost of living.
I then showed up to a car dealership in Bradenton, Florida, pretty much every day, dressed in a suit, and hounded the service manager until he agreed to give me a job.
Then there was the selling of my car, the moving into a dated condo, and the cutting of expenses to the bone so that I could save money and intelligently invest that capital. There were the relentless workweeks of 60+ hours. The getting up at 6:30 a.m. and going to bed at midnight so that I had as much time as possible to hustle.
The rest, as they say, is history.
I went on to quit my job at 32 years old – just four years after starting out toward FIRE – and achieved financial freedom at 33.
I went from below broke to FIRE in six years.
And capitalism was a major reason for that.
Capitalism Doesn’t Require A Secret Handshake
So I was a college dropout. With no money. And no job.
But I put a plan together and executed.
Sure, I could have sat back and blamed capitalism for my ills. I could have gone to political rallies, held up a sign, and shouted my lungs out. That would have been way easier than what I actually did.
However, it wouldn’t have fixed anything.
What I realized during the planning phase was this: capitalism doesn’t require a secret handshake.
There’s no secret password. It doesn’t matter who you know.
Almost anyone can participate in capitalism. Capitalism is available for every American. America has the most robust equity market in the entire world. The wonderful forces of time and compounding can make anyone rich.
Even little ol’ me.
I was a middle-class worker who took advantage of it and am now financially independent at a very young age.
There was some hard work involved, yes. Sacrifices, sure. Tough times, absolutely.
But if you want to avoid hard work and sacrifices, and instead blame the rich, go ahead. See how far that gets you.
Or – and this is a much better idea – you can take advantage of capitalism, become rich yourself, and make your dreams come true!
The crazy thing about all of this is, it’s never been easier to participate in capitalism.
It literally takes minutes to open a brokerage account and fund it so that you can buy stocks – often for free. We can access financial statements online, instantly. There are fantastic tools and services out there – many that cost nothing – that aid you in managing your finances and building wealth.
The sum of humanity’s knowledge is at your fingers. It takes very little time and money to go online and educate yourself. It’s total lunacy to not take advantage of this.
Books that cost little or nothing will teach you how to become financially independent and retire early. I’ve even written two myself, with my most recent best-selling book, 5 Steps To Retire In 5 Years, only running $2.99.
I built my FIRE Fund by doing very simple and old-school things.
I worked hard, lived frugally, and invested my savings into high-quality businesses that pay growing dividends.
There were some lifestyle changes, including being open to moving and taking advantage of geographic arbitrage.
And I even built a business at home with my writing, which eventually went on to become one of my biggest passions in life.
I just did things a little bit different/better than the average person who’s making poor choices with their capital and time.
Again, no handshake. No password. There’s no secret code to know.
But it did require some intestinal fortitude.
You have to step up and get in the game. It’s up to you to provide the will.
Don’t Hate The Player Or The Game
“Don’t hate the player, hate the game.”
We’ve all heard that.
Well, I’m here to tell you that you shouldn’t hate the player or the game.
The game is capitalism.
You should be the player. And you should love the game.
Take advantage of the game. It’s practically begging you to.
Educate yourself. Learn the rules. Put things in your favor. Make your reality as you wish it to be.
I guarantee you this will get you much further in life than sitting around and watching TV, complaining, and being unhappy with your general disposition in life.
The Wealth Gap Will Continue To Expand Due To Compounding
I’ve heard a lot about wealth inequality, where this wealth gap between the rich and the poor continues to widen.
Umm. No kidding!
Of course it continues to widen. That’s the nature of compounding.
Let’s say you have $1 million. And your neighbor has $0.
That’s a wealth gap.
Well, compounding each other’s wealth at just a mediocre 7% over a decade – and doing/adding nothing else over this time frame – means this gap will widen substantially all by itself.
Indeed, your $1 million doubles to $2 million. Your neighbor is still stuck at $0. That’s the rule of 72 for you.
It’s the nature of compounding, which is the nature of capitalism. There’s nothing “bad” or “wrong” about this.
You got in the game. Your neighbor did not. One is rewarded, while the other is not. Choices and consequences.
My own compounding dividend growth snowball continues to roll ever-faster, all while getting ever-larger. I barely invest money nowadays, yet my wealth and passive income grow as if I’m still investing thousands of dollars per month.
This is the power of organic dividend growth. It’s compounding. It’s capitalism.
Don’t get upset when you hear about the widening wealth gap.
Realize this is the nature of things and get in the game so that you can see your own gap – between your future rich and your past poor – widen over time.
I’m not saying in any way that capitalism is perfect.
And I admit that some people are in certain disadvantageous circumstances that make it difficult to follow my prescription. Some people aren’t suited well for a market-based system. I get that. I believe the US should have a more robust safety net to make sure nobody gets left behind. An expansion of the EIC, for example, probably makes sense.
Moreover, I don’t believe we should worship at the alter of the almighty dollar. Some people unhealthily pervert capitalism, endlessly accumulating more for the sake of more. Money is not the cure for all ills, nor is capitalism.
However, capitalism isn’t anyone’s enemy.
It’s an incredible system that has led to radical improvements in quality of life for billions of people.
If you could take a time machine back to 100 years ago, you’d be amazed at how different America was. Generational improvements in the overall standard of living cannot be understated. And virtually everyone benefits. I’d much rather be poor in 2019 than poor in 1919. That’s for sure.
The vast majority of Americans out there have incredibly easy access to one of the greatest wealth generators that’s ever been known to man: the US stock market.
But watching too much television, spending money on stuff you don’t need, and generally being a fool with your money is not gonna get the job done. Capitalism won’t work hard, live below your means, and invest for you. You have to step up.
Living beyond your means and making poor financial and life choices is not a reason to make excuses for your lot in life.
It’s a reason to take a look in the mirror, admit past wrongs, create a better plan, execute, and get in this game.
Create a sustainable lifestyle and a set of good habits. Hustle from dusk to dawn. Design things so that you can build you wealth and passive income over time.
I grew up brutally poor. I’m also a college dropout who found myself broke and unemployed during the Great Recession.
But capitalism gave me a lifeline. It gave me a hand.
However, capitalism can’t do everything for you.
It’s an opportunity. A solution.
It’s not going to go out there and make things happen without you doing some legwork. It offers a hand, but it won’t pull you out of your self-made hole unless you grab that hand and pull yourself out.
So the next time you hear something about a widening wealth gap, get fired up. But not so that you can make excuses and complain. Get fired up to build your own wealth gap – between your current situation and a future version of yourself that is far richer, happier, and freer.
Capitalism doesn’t require a secret handshake. But it does offer you a hand. It’s up to you to reach out and grasp it.
Full disclosure: I’m long capitalism.
What do you think? Have you taken advantage of capitalism? Why or why not?
Thanks for reading.
Image courtesy of: boulemonademoon at FreeDigitalPhotos.net.
P.S. If you’re ready to take advantage of capitalism and become financially independent, check out some awesome tools and services I personally used on my way to becoming financially free at 33!