Set yourself up for a lifetime of prosperity and security with these investing tips.
Imagine every month, for the rest of your life, you receive a check for hundreds, if not thousands, of dollars. Did you win the lottery? No, you made shrewd investments across a range of assets to ensure financial success. Everyone knows you shouldn’t put all your eggs in one basket. That’s why investing across real estate, stocks and businesses is the key to achieving the life you want. Income properties will produce a steady stream of revenue, month-in and month-out, for decades, thanks to renters. Stocks will supply you with quarterly dividends and will increase in value over time. Finally, investing in a small business, whether as a partner or owner and operator, is a great way to create a lifestyle that fits your dreams. No matter if you are looking to supplement your current income, quit your job and take control of your destiny, or simply build an ironclad retirement plan, a diverse investment strategy works.
Invest in Real Estate
Decide if you want to invest in commercial or residential real estate. Next, decide if you want to buy a turnkey property (one ready for occupancy from day one), or a property in need of rehab. After that, the next big step is negotiating financing terms with the bank and lease terms with your tenant. After that, you can reap the rewards for decades to come. A steady cash flow from real estate is a great tool to send your children to college, take more vacations or save up for the future. Additionally, this stable investment can add security to your life after retirement. Investment in one property makes it easier to invest in more down the road too. The revenue from owning multiple properties can be life changing.
Invest in Stocks
The stock market is full of opportunity and failure. However, picking a winning stock is not as hard as you may think. Warren Buffett is a great example of how to invest properly. Buffett buys for the long term. He looks for stable companies that have been around for decades and that will endure consumer trends. One of Buffett’s most memorable quotes is: ”Wrigley chewing gum, it’s lack of change that appeals to me. I don’t think it is going to be hurt by the Internet. That’s the kind of business I like.” Moreover, in the long term, the stock market will always go up. Warren Buffett again has a great quote for this: “In the 20th century, the United States endured two world wars, and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.” It is exactly this reason why investing in smart, well-established companies will ensure you decades of financial reward.
Invest in Businesses
One of the biggest vehicles for the quickest returns on investment is investing in small businesses. There are approximately 30 million small businesses in the United States, and, at any given time, 25 percent are up for sale. Many of these businesses have a successful track record with seasoned employees and a healthy customer base. You can invest in a multi-million dollar business with little money down and receive your initial ROI in less than two years. You can operate the business and/or just become an equity partner. The road to riches is through holding equity in several different income-generating businesses. It is imperative to stay away from start-ups if you are looking for steady income. A start-up is a black hole; they require huge amounts of capital, and they have a failure rate upwards of 90 percent within their first 18 months alone. Keep in mind that most good cashflow businesses are listed with experienced professional business brokers, due to confidentially. It is imperative to interview business brokers, as in every profession; not all business brokers are created equally. Most importantly you want to ensure that you do not overpay for your business investments.
Let’s Talk About Risk
Of course, whenever there is the opportunity for reward, there will be risk. When buying real estate to rent out, the biggest risk is failing to find a tenant or a tenant stops paying rent. Luckily, the safety net here is relatively straight forward. According to the National Association of Realtors, property investors should keep six months worth of expenses on hand in case of an emergency. Here, having multiple properties can also cover any unforeseen costs. When investing in stock, the most you can ever lose is what you paid for the share in the first place. Finally, buying a business does come with some risks; however, if you do your homework and purchase a business in a healthy financial situation, all you have to worry about is collecting the rewards.
Diversifying Your Investments 101
1) To start out, you will need to ask yourself a lot of questions about what types of stock, real estate or businesses that you may want to buy, and where can you find an expert to help. The first step is simply finding answers: The path to success will be illuminated immediately afterward.
2) If you are looking to make an investment that will not only put money in your wallet but also allow you to live the lifestyle you want, buying a business is for you. With 30 million small businesses in the United States, there will be at least one that’s perfect for you.
3) Investing in the stock market is a great way to collect long-term benefits. Invest in well-established companies, and watch the dividends checks roll in.
4) The benefit of owning property as an investment is twofold: Not only do you receive a a check every month but you also get a break on your taxes — thanks to favorable laws encouraging property investment.
5) Overall, anything with the possibility of reward comes with risk. Yet here is the crux of investing in multiple assets. With real estate, stocks and businesses together, you will limit your exposure to risk all while enjoying income from each investment. You will have many eggs in many baskets, which, at the end of the day, is money in yours.