The Pragmatist's Approach to Investing

Often times in life we have this misconception that somehow we will be able to get everything we want if we just wait for the right something to come along.

Maybe that’s the right person to marry, or the right job, or in this case the right investment vehicle. But often times if we ever get to end up to where we want to be all it all, we get there much slower because we choose to wait for that perfect right thing. News flash, nothing is perfect! There is no perfect mate to marry, no perfect job that will solve all of your problems, and no perfect investment that will arrive at your door step,. There is only what’s in front of you, and those are choices.

Rather than pick a choice and go down that path, we choose to stall. I try to tell those that I advise that there is a shot clock to life, and the more moves you make in a shorter period of time, the wealthier you will become. I can’t tell you how many times I hear the phrase “I’m afraid to make a mistake.” It’s this fear that paralyzes us from simple choice. Let’s see how that can effect you on a larger scale.

Let me give you an example of how in life the amount of decisions you make on a daily/monthly/yearly basis can effect where you end up. Let’s say if I make less decisions, hypothetically I can be more accurate in predicting success. So if I make four moves in a year, I will be successful at all four and will never lose. In that scenario, I’ve moved four steps forward. Now let’s compare that to the person who makes 10 moves a year and is successful 80% of the time. In that scenario at the end of the year I’ve moved eight steps forward. That’s four more steps than the person who was successful 100 percent of the time, despite having taken two steps backwards on my journey. Now add that up over time and see how far you get in life. The impact is enormous.

Studies have shown that the main difference between those who are wealthy and those who are not is that those who are wealthy often make more decisions more quickly and then stick with those decisions. On the contrary, those who have not accumulated wealth typically make fewer decisions, take longer to arrive at those decisions, and change their path more frequently once they’ve made a decision.

 

So now that you understand the pragmatist’s approach to investing and to life, it’s time to transpose a common investment situation over top of this belief system. Specifically, what I want to address here is risk. Risk which manifests itself as fear is the biggest reason people choose not to do something, anything in life. So how do we overcome this. To me how I approach it is by understanding that risk is inevitable. There is risk in any investment, and the biggest risk of all is in choosing not to take action.

The wealthiest people are those who can objectively compartmentalize risk and choose the investment that has the most to gain and the least to risk. In today’s crazy world on Wall Street, do you really think you have the most to gain and the least to risk by having your money in traditional investments like stocks, bonds, and mutual funds? That couldn’t be further from reality these days. I know I’m biased because I’m a real estate guy, but to me when you weigh the upside versus the downside of cash-flowing rental real estate in today’s market, I’ll choose that any day over any other investment vehicle. If you agree and you want to learn more or if you’re uncertain, I recommend you take a look at this webinar. Learn what the smartest investors in the market are doing with their money right now.

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