Whether you have been investing for years or are just starting your journey out of the Rat Race, every investor needs direction and motivation. There are 5 key secrets that will help every investor get better leverage and invest wisely. These key secrets have been understood and followed for years by the rich, from the active day trader to budding entrepreneur to the seasoned real estate investor.
Seek to understand how each secret applies in your investing career and do not be quick to dismiss one as under or over your head. The most important aspect of each secret is that you are accountable to actually putting them into practice.
These secrets are tried and true. Learn to apply them and you will accomplish more than you would have otherwise.
Secret # 1 – Know your Game plan and Outcome
There is a difference between those who know “HOW” to invest and those who know “WHY” to invest. There are two kinds of investors. You can be an educated investor or a successful investor.
An educated investor is someone who either through study or street smarts knows “HOW” to do deals. Whether it is from diligence in educational pursuits, executing numerous deals, or a combination of both, the educated investor understands the ins and outs of a deal. We all need to be educated, but the educated investor stops with the know-how.
A successful investor understands “WHY” to do a deal. Successful investors are also educated and continually seek out education. The difference is the successful investor not only knows how to “do the deal,” but also knows how each investment contributes a critical piece to their overall investment plan and strategy.
Without a plan in place, you are relegating yourself to a career of simply being an investor who knows what to do. You will move from deal to deal building a long and varied portfolio, but never go anywhere. Imagine going to the grocery store without a list or a menu. You will go up and down the aisles finding bargain prices and “great deals” on item after item; but because you don’t have a list or a plan, you would leave the store with only some toothpaste and assortment of buy-one-get-one-free snacks. While you may have 70% on your grocery bill, you have left without anything for dinner tonight.
If you do not know why you are making a deal or investment, then it does not matter how great it is or how flawlessly you execute it. Education is important; but if you are aimlessly pursuing opportunities without thought for the bigger picture, you can easily find yourself holding a portfolio that does not allow you to realize your dream.
To be a successful investor, you need to know where you want to go and how you will get there. Decide how you will construct your investment portfolio over the years and what instruments you will use. Be sure to include milestones related to specific dollar amounts and a best- and worst-case scenario. The entire process will take time and many are tempted to forgo such planning and leave their future to chance. They think they can figure it out as they go along or that planning is wasting time that could be used for actually investing. But ask the same people if knowing where they are going and how they will get there is a good idea, and you will get a unanimous “yes” response.
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