Our Back Story
A Dream
Aaron David (FPF founder) committed to spending all of 2007 and half of 2008 working overtime as an ironworker in San Francisco. He took on more and more responsibilities and hours at work in order to save as much as possible during that time period. He had plans to take an extended sabbatical to continue his travels.
He was also becoming more interested in “investing for the future,” and he had read that passive Index Fund Investing was the way to go, so he put his life savings in the stock market in a “diversified portfolio of broad-based index funds” and gave himself a pat on the back. He dreamed of one day retiring and just living off the earnings of a plump stock portfolio.
A Mistake
In October 2008, Aaron was in a rural village in Senegal, West Africa. One day he managed to gain access to the internet to check in on his hard-earned nest egg. He was horrified to find that a large chunk of it had “disappeared.”
Maybe you experienced something similar around the same time? Maybe you can imagine finding that the spoils from years of sweaty, grueling work, and penny-pinching had “disappeared.”
That was one expensive lesson for Aaron. One which he learned well and doesn’t plan to repeat.
A Lesson
From there, Aaron resolved to invest in “Real Assets.” Assets that don’t disappear. Assets like land. He bought a piece of raw land and planned to homestead, securing his retirement through the capacity to work the land, barter, and lower expenses to pennies per month.
Only one problem. Aaron had taken out a loan to purchase the land, and the entire balance was due in 5 years.
As Aaron was in California, working overtime again to pay off the land which was located in New Mexico, his life was growing more and more distant from his dream of homesteading. He wasn’t able to enjoy the land because he wasn’t anywhere near it. His expenses were higher than ever because of the loan, and to top it all off, every year he got a property tax bill and an HOA bill for the land.
When Aaron got married, it became clear that homesteading a piece of rural land was not going to be a feasible plan for the future. Aaron grew tired of paying the expenses for a piece of land he never saw, and would likely never use, and the dream changed once again.
A Plan
Aaron had learned a second costly lesson. His previous plans for financial freedom had failed, but he understood a few things better than before. He now knew that
- He had to invest in something that would not disappear
- He had to invest in something which would actually provide recurring income, rather than recurring expenses. In other words, investments must make money, not cost money.
Aaron decided to invest in rental properties. After a two-week research binge, he quickly took the plunge and bought an 8-unit apartment building.
After gaining experience with this first income property, he later sold the raw land he owned, and with his previously dormant equity unlocked, he was able to invest in even more cash-flowing rental properties.
A Philosophy
Extensive study combined with these experiences and others has helped Aaron develop a hard-earned philosophy of investing geared toward becoming financially free sooner.
Many of the principles run counter to popular retail investment advice (which usually never does lead to financial freedom at all), but his unorthodox investment philosophy has proven to be safer, quicker, and more effective.
Here are a few points:
- Invest in real things that won’t disappear.
- Invest for cash flow to profit today, as well as in the future.
- Investments should make you money. Don’t buy “investments” that cost you money.
(and definitely don’t borrow money if you plan to “invest” in an expense) - “Passive” should be an option, not a requirement. Reserve the right to increase an investment’s value through hands-on involvement if you choose.
- Maintain ample cash reserves. Don’t rush to invest every dollar at all times.
- Educate yourself perpetually.