Investing should not be an exciting roller coaster ride; the best path is a slow and methodical path to wealth. One of the reasons few people become wealthy is that slow but steady progress is not glamorous or exciting, and they become bored and look for ways to get rich quickly.
One supereasy path to stock market success is to just purchase a low-cost S&P 500 index fund or ETF, and use dollar-cost averaging to add to it at regular intervals.
Over a 15- to 30-year time horizon, this strategy works very well. But most people don’t follow it because it is boring and mechanical.
Looking for emotional highs through investing is the recipe for disaster. If you need excitement in your life, find it by participating in sports and outdoor activities like skiing, tennis, roller skating, or kayaking. Don’t invest your money for thrills!
Whether you buy rental real estate, stocks, bonds, tax liens, or gold, it is very helpful to think of each investment as a business. Each investment should be made on its own merits, and each needs to show capital gains, steady income, or both.
Each rental house you purchase is a little business. Your job is to make this rental property business bring in consistent cash flow from month to month. You also need to make sure the property is kept in good shape so that you attract good tenants who pay market rental prices, and also so it increases in value.
Stocks, of course, represent ownership shares in a business, but most people just think of stocks as a ticker symbol that moves up and down in price. They don’t really know much about the companies they invest and buy shares in. You should endeavor to learn as much as you can about each stock you purchase.
Think of the stock market as your local outdoor strip mall, with a selection of small businesses like dry cleaners, fast-food restaurants, etc.
If you were going to invest in any of these businesses, would it be the insurance company that has been there for 20 years? Or the nail salon that has been there for 15 years? Or the clothing boutique that no one ever goes into, and you wonder how it stays open for business?
How about the pizza place that advertises like crazy on radio, announcing its 4th location in town? Or do you invest in the video rental place while knowing that Netflix is killing its business? Or the tax preparation place that only operates 6 months out of the year? Or the trendy high-end salon?
How about investing in the company that own and manages the strip mall?
Which is the best investment in this strip mall? Well, that depends on your desired outcome. For a stable stream of income but probably little growth, the insurance company and the nail salon would probably fit your needs. They are established businesses that are managed well if they have stayed in business this long. They likely would provide good steady income, but not a lot of growth.
The property mall owner could be a good choice for both income and growth if the business is well run and they are growing their portfolio of properties under management.
The pizza place is popular and growing by adding additional restaurants. This investment could provide lots of growth, but probably not a lot of income, as its earnings are being put back into the business to open new restaurants.
The video rental place and the clothing boutique are both in trouble and would likely be poor investments.
Capital Properties
Nice content and tips that every investor can follow through it.