45/45/10 Investing

December 5, 2016 | Filed under: Financial, Real Estate, Stock

Strategy: 45/45/10 Investing

People get greedy. People get sold on products and investments. People don’t think through their long term, short term, cash flow, growth, risk , reward, and speculation investments. Often getting caught up in the excitment or fear of the moment.

After a few mistakes myself, and hundreds (if not thousands) of students, clients questions, and complaints (not about me, but the marketplace). I came up with a simple thought process, that keeps MOST folks safe. Now is a good time for a disclosure. I don’t know your financial background, whether you are young, old or ancient. This approach is just a balance concept for the average person. You may want to consulat a financial advisor about your specific situation.

One of the biggest mistakes folks make is they speculate or are heavy on growth, when what they really need is CASH FLOW. Or speculate way too much. So follow this plan.
45% Cash Flow. Focus on cash flow strategies first. This builds multiple sources of cash flow. If we have more than just job income it keeps us safer. And or allows extra money to build wealth, or leverage. Strategies to consider are:

  • Credit Spreads.
  • Covered Calls.
  • Rental Real Estate.
  • Commerical Real Estate.
  • Small Business Income.
  • Job Income. Hopefully not for Long!

45% Growth. Once we have multiple sources of income working. We can turn our attention to longer term growth. Long term growth makes us rich. One strategy I heard early in my real estate investing career was “buy one rental property a year, for 10 years and in year 15 you will be a millionaire. Run the numbers, it is true if the appreciate rate is about 6 percent or great. Simple growth strategies can make us rich. But it all about the ROI. See growth section on time, roi and compounding. We may consider strategies such as:

  • Real estate appreciation.
  • Buffet Approach
  • Dogs of the Dow
  • Bi weekly mortgage payments.

Less than 10% Speculation. We can speculate and get a better pay day. But we must understand the realationship between, risk and reward. Only a small part of our investing should be speculation. Limiting our risk while, allowing us the opportunity for a big win fall. What I call BIG HITS! Strategies that may fall into this category are:

  • Forex.
  • Real Estate Options.

This type of “balance” approach, keeps us relatively safe. Ensuring we dont get to heavily wieghted with one strategy or another. In fact, I tooked this concept one step further, and created my MILLIONAIRE MATRIX. A balance approach to Investing.

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