Have you ever proudly driven your brand new automobile off the sales lot only to discover that everyone else seems to be driving the same car? You may recall seeing this particular model a few times prior to your purchase, but now you see it everywhere! It isn’t likely that a large number of people suddenly decided to buy the same vehicle on the same day that you did; rather, your mind is playing tricks on you. While I am not qualified to go into a Freudian exposé of the subconscious mind, nor do I wish to do so, I do believe that the mind has an uncanny ability to control what we see…and what we don’t see. I refer to this as “mental vision” – and in the case of the entrepreneur, poor mental vision can result in missed opportunities!

In his book, The Millionaire Mind, renowned financial author, Dr. Thomas J. Stanley, summarizes how several multi-millionaires responded to the question, “How did you become millionaires in one generation?” He summarized their answers by saying, “Most of us saw an economic opportunity that others just ignored, and we had a willingness to take financial risk given the promise of good return…It is less about investing in the stock market, and much more about investing in ourselves, our careers, our professional practices, our private businesses and so forth.” In other words, millionaires aren’t relying on the growth of their investment portfolio to create wealth; rather, they are depending on their own entrepreneurial endeavors.

Entrepreneurs who are skilled at finding those “economic opportunities that others just ignored” need to have quick access to cash, often in the form of liquid investments, so that they can take advantage of such opportunities. Therefore, they are doing themselves a disservice by investing in the traditional retirement vehicles that are most commonly used today. IRA’s, 401(k)’s, and even annuities are great for the vast majority of the population; however, these can be a costly mistake for a successful entrepreneur. Such a mistake comes in one form: huge opportunity costs!

We’ve all heard the phrase, “A penny saved is a penny earned.” But to the entrepreneur, a penny saved in an IRA is one less penny that can be used to create real wealth – the kind of real wealth that is owned by the multimillionaires in Dr. Stanley’s book. Traditional retirement vehicles may seem like the “right and responsible” thing to do; but considering that the wealthiest folks in America didn’t achieve their wealth in this fashion, it would be wise for entrepreneurs to explore alternatives which focus on liquidity – even if it means sacrificing some tax deductions and stock market returns!

Most entrepreneurs will agree that there is tremendous value in maintaining a liquid financial position; and that starts with breaking the cycle of traditional financial planning. If you’ve got what it takes to be a successful entrepreneur, consider the power of making your financial plan more liquid. Start looking for alternative places to put your cash, such as buying your investments outside of an IRA. If you hold them for at least one year prior to selling them, you will be subject only to the long term capital gains tax which currently has a maximum rate of 15%.

Another alternative includes educating yourself about constructing a maximum-funded cash value universal life insurance policy; and then finding a skilled agent who understands the intricacies of these policies to help you facilitate that transaction. Your cash value will grow tax-deferred and can be accessed via fairly low-interest policy loans. These loans are not considered taxable events unless the policy is surrendered or canceled. Fees can be minimized by reducing the death benefit on the contract. Always make sure you don’t reduce your overall life insurance coverage such that you become under insured.

So, before you dump your next wad of cash into an IRA or an annuity simply because someone told you that tax deductions and tax deferral are the keys to great wealth, consider something more liquid. It just might sharpen your mental vision enough to see that next big opportunity for your business! And then who knows, maybe you’ll be the one called in for an interview with Dr. Stanley!

Copyright 2008 Brad Fisher

By: Brad Fisher