You are here because you’re searching for a path – a financial path that will give you the freedom to dictate the terms of your financial future – including the ability to walk away from your day job if you so choose.
Maybe some of you have felt the devastating economic effects of COVID and are searching for a security blanket. Perhaps I can help.
For one reason or another – whether to supplement their income, shield themselves from downturns, or achieve complete financial independence – investors have always been seeking ways to supplement or even supplant their current income.
They know the WHY and the WHAT; they are just unsure HOW to achieve their financial goal. I wanted to achieve financial independence to buy back my time to spend with family, attend events, and take vacations. I just wasn’t sure how to go about it. Stocks? 401(k)s? A financial advisor?
It wasn’t until I started to look into alternative assets that I discovered the true path to financial independence. Modeling the ultra-wealthy approach, I determined that passive income streams would be the only way to cut the cord of a time-constrained job – income streams not possible through stocks, 401(k)s, or financial advisors. That is precisely how I was able to buy my time back thanks to passive income streams.
Before diving into my investing tips for investors, let’s first discuss the two main types of investors:
- The Over-Analytic Investor.
- The Hands-Off Investor.
Does one of these describe you? The key to investing is to find a middle ground.
The Over-Analytic Investor gets in his way and prevents himself from ever taking a step forward. Simultaneously, the Hands-Off Investor lets someone else control their portfolio – usually to their detriment. The happy medium is knowing how to analyze opportunities without allowing them to pass you by while leveraging others’ expertise without letting go of the reins entirely and investing blindly.
With that said, here are my seven investing tips for investors:
Treat Your Investments Like A Business Owner Treats Their Business. Think long-term. Business owners rely on consistent cash flow to meet their operational needs and ensure the longevity of their business. Just like business owners who care for the short-term as well as long-term welfare of their employees, invest with an eye on the short-term as well as long-term welfare of your dependents.
A business owner wouldn’t dream of rolling the dice with their employees’ paychecks on speculative investments. It would be best if you treat your portfolio in the same way. Don’t gamble your portfolio away.
Close The Gap Between Income And Expenses. Financial independence is achieved when your passive income exceeds your expenses. In other words, when your passive income enables you with the ability to walk away from your career if you choose, you’ve achieved financial independence.
Don’t focus just on the passive income side of this equation. By reducing your expenses, you can achieve financial freedom just as quickly as increasing income on a dollar-for-dollar basis.
Use Leverage To Build Up, Not Tear Down. Going into debt to buy toys and assets that only diminish your wealth will push you further from your goals. Use only leverage to acquire assets that go to work for you, building wealth and not taking away from it.
Take The Emotion Out Of Your Decision-Making. Because emotions, hype, and fear cloud judgment – focus on the data. Focus on facts, math, numbers, demographics, economic indicators, trends, and quantifiable metrics.
Because illiquid alternative investments prevent investors from acting on their impulses, seek out these investments. Investments with long lockup periods allow a business to mature and achieve its intended financial goals. Leave as little to chance as possible.
Lean On The Time And Efforts Of Others. You can’t clone yourself, but you can clone your investment objectives and philosophy across multiple passive income streams by leveraging others’ expertise.
By working with experts in specific asset classes and geographic locations, you can diversify your assets without the time, expense, and effort required to gain the expertise and experience on your own.
Invest In Sticky Trends And Not Trendy Investments. It would be foolish to think markets don’t change. Even with the most old-school and traditional asset classes, changes still occur. The key is to not latch on to every “next big thing.”
Latch onto trends with staying power. Look at the data – past, present, and future. Does the data indicate that the trend has long-term viability?
Invest In Assets With Intrinsic Value. Assets with intrinsic value have value separate from what the investing public is willing to pay for it. Assets with intrinsic value are typically productive and produce income-producing goods or services. Assets with intrinsic value appreciate over time – separate from inflation and separate from any hype or investor sentiment.
With intrinsically valuable assets, you can never lose your entire investment because there is always some underlying equipment, land, and fixtures that can be liquidated to pay investors back.
COVID wreaked havoc on many investors and their income – bringing to the forefront the need to have a financial backup plan. As a result, many investors have explored investing more intensely – seeking a path to financial freedom.
As an investor who has succeeded in breaking from the time clock, I have learned some basic investing principles that the ultra-wealthy have been using for years to create and build wealth. I hope to share these principles with other investors who can forge their path to financial freedom.