If you were dropped on earth as a spy from the planet Mars, how would you invest your money?
Assume that the whole concept of money is new to you but you have to work to support yourself.
You see…Mars is having budgetary problems because of its socialist regime and is unable to fund your time on earth.
You get lucky—you land in a place called the United States of America and there is an abundance of opportunities that match your skill sets.
So, you start working for the first time. You are very good with numbers. And, because most people on earth are not, you get a highly skilled position.
Before you know it, you get a few promotions and you start making more money than your simple Martian lifestyle requires.
At first, you are excited by the novelty of it all. But soon, like most earthlings, you start feeling like this thing they call “work” is for the birds.
It’s easy but not very interesting. In fact, you realize that there is a lot to explore on earth that you could bring back to your planet if you didn’t have to be trading hours for dollars during the day.
You start to think about ways that you could work less and explore more.
You start looking at the extra money that you have been using to stuff animals you catch at night as souvenirs and start wondering if it might have a more useful purpose—a purpose that might free you up a bit.
After some simple mathematical calculations, you come up with this novel idea that you call, “investing”.
Now stop for a minute and think…If you were from Mars and no one ever told you how to invest, what would “investing” look like?
Remember, your goal is to replace your income.
Would it be to buy a portfolio of stocks, bonds, and mutual funds for the long run?
Or, would your highly evolved Martian mind surmise that the easiest way to replace an income is buying other sources of income with your extra money?
I’m guessing it would be the latter. Why? Well, because it makes sense!
After all, if your goal is to replace your income, the first thing to pop in to your Martian brain would not be to buy mutual funds! The first thing you would think is… BUY INCOME!
Isn’t that the path of least complexity? Buy things that generate income sounds pretty straight forward right?—indeed an elegant solution for the problem of how to replace the income from your job.
So, why is it so hard for people to get out of the mindset that the “conservative” approach is to invest in the equity markets? Well, because we live in the United States and that is conventional wisdom.
Unfortunately, conventional wisdom in the United States was created by Wall Street and Wall Street is there to take your money, NOT to make you money.
If you were a Martian, you would not have preconceived notions about how to invest. You would not get brainwashed by American conventional wisdom and become Wall Street fodder.
But, you probably are an American rather than a Martian. So, if you want to have your head buried like the other earthly lemmings, that’s up to you. But… you might we well served to look at this whole investing thing with a fresh pair of Martian eyes.