Take Your Foot off the Brakes - a Lesson Learned from My Speedway Experience
This past weekend, my team and our family members spent the weekend at Niagara Falls. One of the activities we did together was the Niagara Speedway kart racing. I’ve visited Niagara Falls several times with family and friends but have never done kart racing.
The Niagara Speedway is a new attraction in Niagara Falls (Opened in 2018). It is the largest elevated go-kart track facility in North America. It’s tall, it’s fast and it’s packed with the adrenaline-inducing thrill of kart racing.
The karts are powered by large 4 stroke Honda motors, boasting 9 HP with a maximum speed of 32 km/hr. Inside the kart, there are two pedals. On the Right is the “Green” pedal for speed (the throttle) and on the left is the “Red” pedal for brakes.
Halfway through the race, I noticed that a few karts were racing past me. I wondered why as I had my right foot firmly down on the throttle for maximum speed. What I did not realize was that I also had my left foot on the brakes for most of the race.
I thought I had my left foot on rest all along.
After the race, we were chatting about our experiences. Jonathan, one of the younger kids with us, said he never stepped on the brakes for the entire race. He had his right foot firmly on the throttle for the entire race!
No wonder he raced past me with so much speed midway through the race. Jonathan figured out a way to get the most efficiency out of his kart. He eliminated all the drag on his speed by not stepping on the brakes!
This experience reminds me of what we do with our finances. We keep one foot on the throttle and the other on the brakes at the same time. And wonder why we don’t make significant progress towards our financial goals.
When it comes to our finances, many of the brakes we put on the growth of our wealth can be eliminated. Here are a few examples of the types of brakes we often put on the growth of our wealth:
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These brakes put a significant drag on our ability to grow our wealth. And they prevent us from getting the most efficiency from our capital.
We miss out on the compounding effects of having our capital invested without interruptions. We miss out on the velocity of money and we miss out on the effective use of leverage to accelerate our wealth.
If you’ve been following me, you know that I’m all about the efficient deployment of capital. It is the reason I wrote the book, Tax-Efficient Wealth.
In his book, The AND Asset, Caleb discusses the concept of efficiency and how it applies to your capital. He writes that maximum efficiency is achieved by multiplying your money through the processes of uninterrupted compounding and unhindered control.
So, if we must get maximum efficiency with our capital, our goal is to seek investment vehicles that will allow us to do this. Based on my research, I’ve put together my top 10 ideal characteristics of the Perfect Financial/Investment Vehicle. While it is hard to find all of these characteristics in one vehicle, you can use this as a guide when making decisions on how to deploy your capital:
In later articles, I will define these characteristics and explain why they are so important. I will also examine some of the popular financial/investment vehicles available today against these 10 characteristics.
So, stay tuned for more on this.
For now, let me know what your top 3 characteristics are for the perfect financial/investment vehicle. It may be something that is not on my list so feel free to share…
In the meantime, take your foot off the brakes!