45-45-10 Plan to Wealth
Strategy: 45/45/10 PlanโA balanced approach to investing.
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:
- Get a job. A good start, but not the only solution.
- Credit Spreads. Monthly income from the stock market.
- Covered Calls. Rent your stocks out and get paid.
- Rental Real Estate. Single residence, duplex or triplex.
- Commercial Real Estate. Mobile Home Park. Bill Boards. Storage.
- Small Business Income. Web sites, services, retail, & professional
- Intellectual property. Write it once, get paid forever.
- Referral fees. Match products and databases; take a small percentage each and every month. 2% can make you rich.
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 โbuy 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 and further explaination of tactics. We may consider strategies such as:
- Real estate appreciation. Long term growth.
- CANSLIM. An uptrend growth strategy.
- Buffet Approach. Key fundamentals.
- Dogs of the Dow. A simple Dividend Strategy.
- Bi weekly mortgage payments. A interest cutting program.
10% Speculation. We can speculate and get a better pay day. But we must understand the relationship between, risk and reward. Only a small part of our investing should be speculation. Unfortunately, many investors speculate too much. They gamble on the long shot, when they should be making small amounts of money consistently over time. A few examples of speculation maybe:
- Land options.
- Buying homes on Speculation.
- Development(s).
- Naked options. High risk.
- Forex (high leverage positions).
Now if you have the right education, and experience these โspeculativeโ strategies can be safer. As experience, can give you higher probability of success. A forex investor has a distinct advantage, if they know support, resistance, world economy, an Elliott Wave, or Gartley pattern. He will tell you a hundred to one leverage (or more), is not risky, but profitable. The key here being EDUCATION, STRATEGY and EXPERIENCE.