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Imagine that you’re independently wealthy. How would you live your life? Would you travel, spend more time with your family, or focus on your hobbies? Whatever your dreams might be, Dutch Mendenhall, author of the book “Money Shackles: The Breakout Guide to Alternative Investing” and founder of RADD Companies, wants to help you make them come true.

“The wealthiest people in the world have a system and process that they follow to maintain and build their wealth,” Mendenhall explains. “They’ve figured out how to minimize taxes even while maximizing returns, but they also understand how to have their money work for them. They don’t spend their whole life working to make more money.”

Thanks to Mendenhall, the secrets of the wealthy are now broadly available to everyone, regardless of their personal background or circumstances.

Breaking free from drudgery

Mendenhall named his book “Money Shackles” because most people are raised in a way that keeps them imprisoned in a mindset of drudgery. “In average middle-class families, parents don’t teach their kids much about making money,” he says. “They just hammer the message into your head that you need to work hard, but ironically, when they start making money, many people don’t know what to do with it. So, they do things that keep them dependent on the system, and they have to keep working to bring in more money as a result.”

On the other hand, Mendenhall provides a way out. “It’s about decoding the system so people can break free,” he says.

Part of the secret is not allowing your lifestyle to become more expensive as your salary increases. “If you can keep your costs down, you have more money to invest,” Mendenhall explains. “The more you can invest, the more you can hope for in return.”

In this way, converting discretionary income into capital enables people to garnish reliable returns. “Invest enough, and one day, a magic moment comes when you get more income through these revenue streams than from your employer,” Mendenhall explains. “When that happens, you’ve obtained financial freedom. You don’t need to work anymore.”

Yet Mendenhall doesn’t necessarily advise pumping all your money into Wall Street.

The advantages of alternative investments

“Almost everyone just goes to Wall Street on autopilot,” Mendenhall says, “but that’s not necessarily the most advantageous decision.”

Mendenhall encourages investors to diversify their portfolios by including alternative investments. “I know what you’re thinking,” he says. “You think you can’t become a venture capitalist or angel investor because you aren’t already a gazillionaire, but the truth is you can, through something called fractionalized ownership.”

Fractionalized ownership is crowdfunding for investments. While individual investors might not have enough capital to make a lucrative deal all by themselves when they join groups of other investors, the whole game changes. Indeed, that was the intention behind the US Congress’s decision to create Real Estate Investment Trusts (REITs) in 1960.

Making money work for you with REITs

“Not everybody can buy a $3 million mansion on the beach, right?” Mendenhall says. “But get a group of a hundred or a thousand people together, and they have enough purchasing power to own real estate collectively. By joining forces, they can make the same compounded returns the wealthy make.”

REITs open up real-estate investments for ordinary people who don’t have the resources, time, or inclination to amass and manage their own real-estate empire. By buying into a REIT, you can automatically own a small share of that group’s portfolio. These usually include a range of assets, from warehouses and self-storage facilities to apartments, hotels, and assisted living centers. The REIT’s expert managers are responsible for making purchasing decisions and overseeing the properties, leveraging each to maximize returns. As a result, shareholders don’t take on burdensome obligations even while they can take a share of the profits.

While investing in REITs does incur risk, statistics show these securities have a long history of paying off. According to The Motley Fool, “REITs have outperformed stocks on 20-to-50-year horizons as well as in the latest full year of data (2021). Most REITs are less volatile than the S&P 500, with some only half as volatile as the market at large.”

The Wall Street Journal has identified several reasons why REITs perform so well: 

“The most immediately obvious [factor] is the difference in the fees charged by REITs and private funds. Another, almost as evident, is the quick liquidity of REITs. A third is the lower leverage that REITs typically employ — they’re far less debt-driven than are most private equity real estate funds.”

Alternative investments mean more opportunities than ever

Don’t spend your life wearing Money Shackles. Liberate yourself from the grind through investing. Alternative investments, fractionalized ownership, and REITs make it possible.

“The American Dream has changed,” Mendenhall says. “It might not be your grandparents’ American Dream, but there’s more opportunity than ever thanks to these innovative approaches, and they are available to anyone willing to educate themselves about how to make money.”

Published By: Aize Perez