5 Steps To Good Investments

Dear Reader,

I am often asked questions like, “I have $10,000 to invest. What do you recommend I invest in?” And my standard reply is, “Do you have a plan?”

I was a guest on a radio show in San Francisco. The program was on investing and was hosted by a very popular local stockbroker. A call came in from a listener wanting some investment advice. “I am 42 years old. I have a good job, but I have no money. My mother has a house with a lot of equity in it. Her home is worth about $800,000 and she owes only $100,000 on it. She said she would let me borrow some of the equity so I could begin investing. What do you think I should invest in? Should it be stocks or real estate?”

Again my reply was, “Do you have a plan?” “I don’t need a plan,” was the reply. “I just want you to tell me what to invest in. I want to know if you think the real estate market is better or the stock market.”

“I know that is what you want to know—but do you have a plan?” I again asked as politely as possible.

“I told you I don’t need a plan,” said the caller. “I told you my mother will give me the money. So I have the money. That’s why I don’t need a plan. I’m ready to invest. I just want to know which market you think is better, the stock market or the real estate market. I also want to know how much of my mom’s money I should spend on my own home. Prices are going up so fast here in the Bay Area that I don’t want to wait any longer.”

Deciding to use another approach, I asked, “If you’re 42 years old and have a good job, why is that you have no money? And if you lose your mother’s equity money from her home, can she continue to afford the home with the added debt? And if you lose your job or the market crashes, can you continue to afford a new house if you can’t sell it for what you paid for it?”

To an estimated 400,000 listeners came his answer, “That is none of your business. I thought you were an investor. You don’t need to dig into my private life to give me tips on investing. And leave my mother out of this. All I want is investment advice, not personal advice.”

One of the most important lessons I learned from my rich dad was this: “Investing is a plan, not a product or procedure.” He went on to say, “Investing is a very personal plan.” And that is why I always ask about a plan first.

My point in telling you this story is to illustrate that there really aren’t bad investments, just bad investors. If you have a plan and a financial education then any investment could be a good one.

Find A Plan That Works For You

You might be asking yourself, “How do I find the plan that is right for me?” My standard answer is that it comes in steps:

  1. Take your time. Think quietly about your life up to this point. Take days to think quietly. Take weeks if you need to.
  2. Ask yourself in these moments of quiet,“What do I want from this gift called my life?
  3. Don’t talk to anyone else for a while, at least until you are certain you know what you want. All too often, people either innocently or intentionally want to impose on others what they want for those people instead of respecting what others want for themselves. The biggest killers of deep inner dreams are your friends and family members who say, “Oh, don’t be silly,” or “You can’t do that.”
  4. Remember that Bill Gates was in his twenties when he started with $50,000 and became the richest man in the world with $90 billion. It’s a good thing he did not ask too many people for their ideas on what they thought was possible for his life.
  5. Call professional investors. All investment plans begin with a financial plan. If you do not like what the professional says, find another one. You would ask for a second opinion for a medical problem, so why not ask for many opinions for financial challenges? Financial advisors come in many forms. The advisor could be a coach or a mentor, someone who has already done what you want to do. Choose an advisor who is equipped to assist you in developing a written financial plan.

So how do you find your own plan? The answer is, begin with a financial coach or mentor who has already done what you want to do. Ask them to provide their qualifications and interview several. It will very likely be an eye-opening experience. So start with realistic goals, and then improve upon or add to the goals as your education and experience increase. Always remember that it is best to start by walking before you run in a marathon.

Getting Rich Is Automatic If You Have A Good Plan and Stick to It

Rich dad explained to me that investing is not what most people think it is. He said, “Many people think investing is this exciting process where there is a lot of drama. Many people think investing involves a lot of risk, luck, timing, and hot tips. Some realize they know little about this mysterious subject of investing, so they entrust their faith and money to someone they hope knows more than they do. Many other so-called investors want to prove they know more than other people—so they invest, hoping to prove that they can outsmart the market. But while many people think this is investing, that is not what investing means to me. To me, investing is a plan—often a dull, boring, and almost mechanical process of getting rich.”

He continued, “Investing is simply a plan, made up of formulas and strategies, a system for getting rich—almost guaranteed.”

So if investing is simply a matter of following a recipe, then how come so many people don’t follow the same formula?” I asked.

Rich dad replied, “I’ve often asked myself the same question. I’ve also wondered why only three out of every hundred Americans is rich. How can so few people become rich in a country that was founded on the idea that each of us has the opportunity to become rich? I wanted to be rich. I had no money. So to me, it was just common sense to find a plan or recipe to be rich and follow it. Why try to make up your own plan when someone else has already shown you the way?”

Rich dad found his formula playing Monopoly®, the same game he used to teach his son and me how to invest.

During this lesson of creating a plan, he said, “To me, if the formula is complex, it is not worth following. If you can’t do it automatically after you learn it, you shouldn’t follow it. That is how automatic investing and getting rich is as long as you have a simple strategy and follow it.”

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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