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June 2, 2020
Let’s talk investing. First, I want to note that I am not a financial advisor. I’m simply someone who has invested herself, learned along the way, and would like to share what I’ve learned in the hope that it helps others. And because of that, I think it’s REALLY important that when considering an investment, you have to look at how it will personally affect your situation. No matter what anyone else may say about an investment, it’s necessary to evaluate how it plays into your personal financial goals, and you are the only person who is able to make that call. I’m a big believer in gathering as much information as you can, so you can make a well informed decision for yourself. So hopefully, what I share with you today will help you make great choices in the future!
Beginning to invest is like starting any other project- you want to start with the end in mind. So however long your goals are set for (5, 10, 20 years, etc), think about what the goal for that timeframe is, and make your plan from there.
Personally, cashflow has always been the most important of my financial goals. As a result, I have always looked for investment opportunities that pay income of some sort, (like a dividend, rental income, royalty), so that I can re-invest and multiply my earnings.
So when it comes to making these investments, you need to determine what the risks are, and if you are comfortable with them. For example, things like hedge funds or even rental properties have a potentially high reward, but they also have a potentially high risk. Take our current situation with Covid- many people who rely on rental properties for income are facing loss right now.But if someone went into that investment understanding that unforeseen circumstances may crub income temporarily, chances are they are totally ok. So you need to determine what your risk threshold is before investing. However, I am a big fan of rental income, especially if you happen to own the property free and clear. People always need a place to live… so this is an investment that can both cashflow for you, AND appreciate over time.
If you have a lower risk threshold and want a more stable investment, you can look to things like bonds or mutual funds, or even a 401k… the point is there are all kinds of options available. It all depends on your personal circumstances, and how the investments you choose line up with the goals you have and your risk threshold.
If you’re willing to step a little beyond the super stable investments like bonds, etc., dabbling in the stock market might be for you. I like to adhere to the advice of Warren Buffet when it comes to the stock market. Choose five products that you consume in your daily life- something you know is not a fad – and invest in the company that produces it. For example, I use Apple products every single day. I know they’re not a fad. So I invest in that company. And I do it using something called “dollar cost averaging”, (which I also recorded a video on a while back) so that my investment grows steadily over time.
Also, word to the wise- in the current environment where the stock market has been such a roller coaster, DO YOUR RESEARCH. No matter what kid of advice you hear from anyone else, you need to do your own research on whatever company you consider investing in.
Not sure where to start? My suggestion is to start googling different types of investments to learn more about the risks vs rewards, and start determining what is right for you. Below is a super basic list of types of investments you can begin researching:
In its most basic form, the pyramid of action for your financial plans should protect the wealth you already have as the base, then look to future income, then appreciation of your wealth at the very top.
I’m going to be talking about this much more in depth in our Smart Steps group over on Facebook so if you have any questions, I hope you join me there!
Lizy Hoeffer NMLS ID # 260183. AZ LO-0913409 I am authorized to conduct business in the state of Arizona. All loans subject to underwriting approval. Certain restrictions apply. Call for details. THIS SITE IS NOT AUTHORIZED BY THE NEW YORK STATE DEPARTMENT OF FINANCIAL SERVICES. PHONE NUMBERS DISPLAYED ARE NOT FOR USE BY NEW YORK BORROWERS. NO MORTGAGE SOLICITATION ACTIVITY OR LOAN APPLICATIONS FOR PROPERTIES LOCATED IN THE STATE OF NEW YORK CAN BE ACCEPTED THROUGH THIS SITE. CrossCountry Mortgage, LLC. NMLS1925878, 3100 West Ray Road, Suite 201 Office 212, 218, 219 & 228, Chandler, AZ 85226 (www.nmlsconsumeraccess.org)
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