We speak with Alfio Bardolla, an Italian thought leader and financial educator, about how to invest safely, how to plan for retirement, how to use cryptocurrencies safely, and his path to becoming rich.
If you have landed on this article, chances are you also want to join the rich club. However, with the fluctuating job market and the instability that has marked the work experience of Millennials, being able to map out a plan for financial freedom can seem unreachable. To inaugurate our Money section, we speak with financial educator Alfio Bardolla about how making smart decisions about money today and setting up a passive income stream is the key to the financial freedom of the future.
Savings are not as profitable as they were a few years ago. What is a safe investing alternative for those who are looking to earn passive income?
Alfio Bardolla: First of all the safest investment is surely the one in your personal financial education. That’s how you can acquire the mentality of the rich person and learn how to produce, manage and protect your money. It is a mix of attitudes and techniques that will never abandon you and that will protect you from risky investments and financial problems. But above all, will allow you to produce wealth, in any situation you are in and on your own. Then you can learn how to invest successfully to earn your passive incomes: a system that relies on investments that untie your time from the production of money, which you can find in areas such as business, trading and real estate investments.
Retirement plans seem to be at risk in Europe. What would be your advice for a 30-year-something looking to start prepping for retirement?
Alfio Bardolla: That’s right, retirement plans are at risk, and most likely, many of us will not even see them. And even those who have the chance to have them, will see their income reduced and therefore their lifestyle too. My advice is to start building your financial freedom. Create a system for which money is working for you, to maintain your desired lifestyle, as soon as possible and forever.
Do you have to be rich to invest in real estate? Do you recommend people to invest in apartments they want to live in, or to rather rent?
Alfio Bardolla: No, you don’t have to be rich to invest in real estate: there are operations called “no money down” that allow you to start even without money, but very few know this kind of options.
I have been investing in the real estate market for about 12 years, and investing in a property is the biggest and most important that a person will deal with in his life. Yet nowhere else than in my courses, is explained how to do it: how to deal with real estate agents, what contracts to use, how to apply for the mortgage, how to negotiate with the bank, how to make a good deal, how to look for the property and so on. This information can only be found by us, and it is paradoxical because it is the most important investment in a person’s life. Now, what I always say to my students when they sit down on the first day of classes is: “buying a house is wrong”. And they’re usually shocked. Why is buying a house wrong? It is from a financial point of view because you’re using your debt capacity to get a bad debt, which is a debt that will not generate revenue, and not a good debt, which is a debt that will. So buying a home is an investment? No. An investment is buying a house to rent for a third party or buying a house to renovate it and resell it. Of course, this provides that there is a financial intelligence, or a financial education upstream. So living on rent and using your debt capacity to invest in real estate is the right thing to do. But if you’re not able to make your money for you, instead of “doing nothing”, then it’ better buying a house because at least somehow you set aside something because of the mortgage, but it must be an extreme ratio, it is not the best practice.
It must be said that usually, people give a particularly important affective value to the house, to the nest where to build their family, and for this I always say: buying a house is a wrong investment from a financial point of view; from the sentimental point of view, however, a whole series of other considerations are opened, which are personal. But people need to know that, if they make that kind of choice, they will have a block from the point of view of debt capacity and therefore they will be able to do less real estate transactions and will be able to make fewer investments in general.
In a nutshell, how can Millennials put their money to work for them?
Alfio Bardolla: You have to put in place a system of automatic earnings that is disconnected from your time.
If you stop doing your job, you also stop earning money. On the other hand, for example, if you rent several properties and make money from renters’ payments, you can also stay home to play with your children and continue to make money.
A financially free person manages to cover the expenses of his desired lifestyle with only his structure of passive income, which are given by real estate investments, in business and in trading.
Do you think cryptocurrencies are going to be the next big investment or yet another economic bubble that explodes?
Alfio Bardolla: Cryptocurrencies are a very fashionable speculative tool, from a financial point of view. And they are also a very ambitious project of disintermediation of the financial system.
Under these points of view, cryptocurrencies are particularly interesting, but you should invest in these tools just if you have understood exactly its nature and if you have segmented your capital and have decided to put apart, even small, at risk.
The problem very often resides in people’s expectations. That is, people invest in cryptocurrencies thinking that each one will be successful and that each one will be able to give the same result of the bitcoins, which went from almost zero to almost $ 20,000, but that also have retraced and then returned. It is an extremely volatile, extremely speculative market, but it is also a market from which you can not have realistic expectations, also because it is decentralized by definition. It is not regulated, the counterparts are often not reliable, there are high chances of gain, but also high chances of loss. For this reason, I recommend investing in cryptocurrencies only to people who have trained, who know what they are doing and who are able to use a venture capital approach. So, given that in fact, every ICO is a start-up, for example, I invest in 10 startups, knowing that 2 will be fine and 8 will fail. It’s a business statistic, and as a whole I know I’ll earn because the 2 that will be successful, will go very well and make me gain, even covering the losses I’ve sustained. In some ways, it is a calculated risk. In conclusion, I recommend investing in crypts to those who have money to throw away, or who do not impact on their lives, or who are able to operate at a calculated risk.
We have to ask: What is the secret to being rich?
Alfio Bardolla: What I have learned in these years is that success and wealth have no secrets. It has a simple recipe, which consists of determination, continuous training, techniques and the right psychology. If I have to give a proportion, I would say that psychology counts for 80%, because it allows you to see opportunities where apparently there are problems. Within psychology, a strong component is linked to the Focus. People overestimate what they can do in 1 year and underestimate what they can do in 5 years. Keeping the focus on what you really want is one of the keys to success for people who get results.