Your level of success in any activity is largely dependent on the quality of your process and your ability to follow it accurately. Likewise, smart investment decisions require a solid decision-making process.
Try this sequence of steps before making your next investment decision:
1) Figure out if it’s the best use of your money. Paying off a credit card with a 22% interest rate is likely to result in a better return than any other financial investment.
In most cases, investing is a smart move, but not always.
2) Consider whether the investment is congruent with your investing timeline. All investment goals should have a timeline. Does this potential investment match the deadline of your investment goal?
It doesn’t make a lot of sense to invest in ultra-conservative short-term investments to achieve a goal that’s 20 years into the future.
3) Evaluate the level of risk. Is the risk level appropriate for your timeline and your comfort level?
4) Ensure you understand the investment. Some investments are extremely challenging for even financial professionals to fully grasp. Avoid being lured into investments that are beyond your current level of expertise.
Albert Einstein once said that you may not truly understand something if you can’t explain it to your grandmother. Could you explain your investment to your grandmother and make her understand?
It’s not easy to be successful with something you don’t understand. Seek advice from a financial expert and then try explaining your investment to someone with less financial sophistication than yourself to show you fully understand it.
Do you know everything you need to know? Some investors have a habit of knowing 90% of what they need to know and then decide that’s ‘good enough’ because things get too tedious.
5) Ask yourself why you’re enamored with this investment. Warren Buffet once implied that if people were limited to ten investments, they would make their choices more carefully and end up extremely wealthy. Would you make this particular investment if you were limited to only ten?
Are your investment choices based on valid reasons?
Did your research verify your decision?
Would you feel confident recommending this investment to a friend or family member?
Are you guilty of any behavioral finance biases?
6) Assess what level of monitoring the investment will require. Some investments require little monitoring. However, many require constant attention.
Are you prepared to do the necessary work and do you know how?
Create a schedule for follow-up that’s appropriate for your investment.
7) Know when to get out of the investment. Every investor is well served by knowing when and how to get out of an investment. Know your exit strategy and the signs that it’s time to get out of an investment.
What signs will you look for as a signal that it’s time to sell?
Is your investment sensitive to interest rates?
Will a change in technology render your company’s primary product or service obsolete?
Give your investments and your future the respect they deserve. Try this process before making your next investment decision. Using a good decision-making process will always give you better results.
"An investment in knowledge pays the best interest." — Benjamin Franklin
“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case." — Robert G. Allen
"It's not how much money you make, but how much money you keep, how hard it works for you, and how many generations you keep it." — Robert Kiyosaki
Traction: Get a Grip on Your Business!
In Traction, you'll learn the secrets of strengthening the six key components of your business. You'll discover simple yet powerful ways to run your company that will give you and your leadership team more focus, more growth, and more enjoyment. Successful companies are applying Traction every day to run profitable, frustration-free businesses—and you can too.
Over 1 Million Copies SOLD!
4.6 Stars with 7296 reviews!
Grab it on Amazon —--------> https://amzn.to/3N32gpa
Expand The Business Facebook Community of over 3700 Business Minded folks https://www.facebook.com/groups/464523613590511
Our Real Estate Investor Network USA group of over 610 Investors from around the USA https://www.facebook.com/groups/1046413479606105
Home of my YouTube channel and where the Expand The Business Podcast will live: http://www.CaseyOnVideo.com
How a Brewery Owner Put His Business on the Map… for FREE!by Casey EberhartDaniel, the owner of a small, local brewery, faced a familiar problem: no one knew his business existed. Tucked away on a side street, his place was a hidden gem, and he couldn’t afford the expensive ads needed to get the word
Read MoreEngaging Your Audience with Effective Email Campaignsby Casey EberhartWhen Sophia launched her logistics company, she knew speed was important, but she soon realized communication mattered just as much. She shifted her focus from basic transactional emails to building relationships with every message.From Transactional to MeaningfulIn the beginning, Sophia’s emails were just for tracking and invoices.
Read MoreHow to Build a Brand That Stands Out and Sticksby Casey EberhartWhen Marco launched his event planning business, he assumed stunning venues and flawless logistics would be enough. But after his first year, clients loved his events but often forgot his company’s name. That’s when he realized a memorable brand was what would keep his
Read MoreGrowing Your Business with Smart Networking Movesby Casey EberhartWhen Maya, a real estate agent, first started out, she thought networking was all about collecting business cards. But her business coach gave her a new perspective: every handshake was raw material for her marketing. The real goal was to extract value from every event and share
Read MoreUsing Social Media to Boost Your Business Reachby Casey EberhartWhen Mark opened “Peak Performance Fitness,” he knew his new gym was up against big franchises with huge marketing budgets. His business coach gave him a simple directive: forget old-school ads and make social media his main marketing tool.From Broadcasting to CommunityAt first, Mark’s posts were
Read MoreNetworking Made Simple: Turning Everyday Chats into Business Winsby Casey EberhartWhen Julia launched her online print shop, she thought marketing meant big ad campaigns. But her business coach gave her a different idea: your best opportunities might come from the conversations you’re already having.From Formal Events to Casual ChatsJulia’s view on networking shifted from a
Read More