In this episode, Jimmy and Brad revisit the concepts inside the book Antifragile. They take a deep dive into practical applications, how they relate to The Wealth Pyramid, and why orders of operations matter while building wealth.
When it comes to wealth building, it is essential to consider how you do things. Look at it like this; it doesn’t make sense to water the ground if you haven’t planted seeds. What matters is the route taken, not just the destination. If something is fragile, its risk of breaking makes any work you do a waste of time until you reduce its fragility.
Tune in as Jimmy and Brad explain what you can do to optimize your order of operations and how to diminish fragility systematically.
Step One in Becoming Antifragile
“Your rate of return is irrelevant if you have a risk of ruin”- Jimmy Vreeland
Many people come to CashFlow Tactics, feeling excited about the possibility of financial freedom in ten years or less. Suddenly, their ideal life of adventure and spontaneity is on the horizon. Most of them are quickly disappointed when they realize the first thing we do is make sure their life is as safe and boring as possible.
Step one is setting a foundation of protection and liquidity before we move into a sort of investing. The rate of return does not equate to financial freedom. It’s not even a real metric. Really, it’s our best guess at a specific moment in time.
Why We Use the Wealth Pyramid
That’s why we illustrate financial freedom in the shape of a pyramid. It’s in a pyramid because it stacks, and by that very definition, the base must be stronger than the top. At the foundation, you are acknowledging that you are your greatest asset and that you must first invest in yourself.
The next level of the pyramid is what we call the base, and it’s where we focus on protection. Since you are your greatest asset, you must be protected so that you continue to have the ability to produce.
As you move up the pyramid, you begin to lose pillars and take on risk. As you take on more risk, your risk of ruin increases. At the very top, there is just appreciation as return potential, and the risk of ruin is at its peak.
The average person works the pyramid in reverse. They go after everything we’re taught, which are the pillars at the top of the pyramid, but there is no foundation, so they expose themselves to the risk of ruin. Going back to our planting analogy, it doesn’t matter that we had all of the elements. It matters that we follow a specific order of operations.
Don’t Miss the Irreversibility of Damage on Your Path to be Antifragile
Taleb says that fragility has a ratchet-like property. You can come back from ruin, but it will not look the same. Investors can’t get their time back. That time spent in ruin is lost forever. That’s the irreversibility of damage and why you’re stuck playing a forty-year game.
Never lose money as your first rule is the action of being aware of antifragility. Most people have such a long and difficult journey to financial freedom because they don’t understand this principle.
“When you lose time you lose the most important piece of what you’re trying to get in your plan”- Bradley Gibb
If you want to start out by building a strong foundation, then check out our FREE 5-day Cashflow Tactics Challenge. We’ll take you through the steps needed to become antifragile. We’ll see you there!