7 Steps to Create More Financial Success in Life- Day 5
5. Have a diversified investment strategy
Like I mentioned, I work with a lot of solo entrepreneurs and business owners and I see that the mistake that we all make is that we only focus on one thing.
Maybe you’re a business owner and your business is your primary source of income, or maybe you’re a real estate investor and 99% of your assets are in real estate but think of this – all markets crash.
Years ago, the real estate industry crashed and investors lost the millions that they invested. Today, people see the beauty of the growth of certain industries, but they mostly do not consider the crashes in the market. We become so focused on the beauty of our investments and keep on thinking that the market is always going to get back on track, but it takes time. That happens in all markets, not just in real estate.
I realized that it’s not one thing that’s going to make you healthy. It may get you rich quickly, but it will not be sustainable. It is something you could compare to a house – there are many houses that look beautiful on the outside, but inside, it is not solid.
When you build your house, wouldn’t you want it to be solid inside and out? How many of you would want to have a house that’s solid enough that it could weather any storm that may ever come?
If that’s what you truly want, having a diversified portfolio is the key.
I believe that investing, it’s all about strategy. It’s not about what kind of vehicle you have, it’s about the purpose of the vehicle – the reason that you have this vehicle in your portfolio and if you really know how to use it.
I help a lot of people plan their businesses and finances and the majority of them do not know the purpose of the vehicles they have. Some people have a living trust, but they do not know if what they have will deliver what they need when they need it.
Let’s say you have most of your assets in one kind of investment, it could be real estate or it could be in stocks. When one market crashes, the other one gets affected. For my clients, I create a balance. I have this principal-protected investment that doesn’t lose any money when one market crashes. Why is this so important? Because the best time to invest your money is when the market crashes.
When this happens, most people look at their money and find that they do not have enough to invest anymore. Your principal-protected investment is what will help you create multiple streams of income. Let’s say you have this, and the real estate market crashes. You can easily take from it and invest it so you can grow it. That’s how they generate massive wealth.
Even Warren Buffet says diversification is the key.
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