Investment vs. Strategy

I am frequently asked about specific investments. Here are a few examples of the questions I receive.

I will have $200,000 as soon as my investment property sells, what would be the best way to reinvest? If I do a 1031 exchange, should I try and buy several properties or just a single property?

I have $300,000 which is currently invested in funds. Is there a better strategy to invest without more risk?

The answer to these and all other investment questions is the same – It depends. It depends on your personal wealth strategy. What investment characteristics are most important to you? Is a high rate of return more important than the level of risk? And what are your investment criteria? Do you have a particular loan to value that you are trying to maintain in your real estate investing? Do you have a price range you are trying to meet? What cash flow level is important to you?

The magic of creating a personal wealth strategy is that you can answer all of your own investment questions simply by referring to your strategy. You have determined what types of assets you will invest in. You have determined the investment characteristics that are important to you. Most of all, you have set specific criteria to meet in order to make an investment.

Most investment mistakes come from not following a well thought out wealth strategy. I know several people right now who are struggling with their financial situation. Why? When I look at what they have done, it is clear that they did their investing without a clear strategy. Or, they had a strategy and deviated from it.

So be sure to create and follow your personal wealth strategy.

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