Are You on Offense or Defense?
By Rob Minton
I just came across an Income for Life newsletter from January of this year. In it, I wrote an article called “All-Out War for Financial Independence,” which outlined how we can use the time-tested tactics of Sun Tzu’s military masterpiece, “The Art of War,” in our own battles for financial independence.
One of Sun Tzu’s sayings sticks out at me as I glance again at the article:
“Security against defeat implies defense tactics; ability to defeat the enemy means taking the offensive.”
I wonder, as the year has played out since January, how many wealth-builders have been on the offensive. My guess is that more people have been using defensive tactics during this recession in the United States. Playing not to lose, rather than to win.
While I believe SOME defensive tactics are necessary — cutting expenses to increase savings, for example — nobody is going to win the war for financial independence by only being on the defensive. If you hole up in your bunker, head covered until the bombs stop falling, what will happen? You’ll crawl out when you feel safe again and the world around you will be crumbled. Congrats, you survived. Are you any better off?
Let’s look at it another way, with the financial crisis in mind. You are worried that you’re going to lose your job, and you’re convinced you need to do something to protect your income. So you take a second job — for $10 an hour at the local big-box retailer, which is kind enough to let you work part-time on nights and weekends.
This is a defensive strategy. Are you protecting income? Sure, in the short-term. But in the long-term, what are you going to gain? Trading nights and weekends for $10 an hour is not my idea of long-term benefit.
What if instead of taking that $10-an-hour job, you invested the time into starting your own “side” business? As I have written a million times before, some of the great businesses of our time were born in the roughest of economic times. Couldn’t you invest the nights and weekends into yourself, starting a side business with long-term potential, rather than giving that time away for $10 an hour?
Become a real estate investor, or a consultant, an affiliate marketer, a property manager — heck, start a dog-walking service — and you will be taking the OFFENSIVE in your war for financial independence.
Same with investing. Did you cash out when your retirement plan took a nose dive last fall, hoping to cut your losses? If you did, and kept your money out of play, you lost out on the securities market bounce this spring. Defensive move. After the market tanked, had you put money INTO the markets, buying quality stocks at bargain prices, you’d be better off now than those who cashed out. That’s going on the offensive.
The Income for Life position on financial independence is this:
You cannot achieve financial independence playing defense. You must play offense, taking advantage of excellent investing opportunities as they present themselves.
I have done this in 2009 in my own business. It’s been hard work. It’s required effort and taking some chances. But I know that going on the offensive, rather than holing up in my bunker with my head covered, hoping for and waiting for the bombs to stop dropping, is going to ultimately help me win the war in the long run.
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