Who wants to be a millionaire? No, let me rephrase that. Who wants to be a multimillionaire? It's not all that hard these days to become a millionaire on paper, but to build a multi-million dollar individual investment portfolio is another matter.
Building a multimillion-dollar investment ownership requires something called direct buying. Before I outline the 8 steps involved in a direct asset allocation plan, I'll first describe what I mean by direct buying.
Most investment portfolios consist of a variety of stocks and bonds and, in some cases, property. Most of these investments are passive in nature, require a middleman, aren't a hard, real asset that you can see and touch, and typically only involve one or two asset classes.
Direct asset allocation, or what's also called direct participation programs, are direct (no middleman), involve the purchase of a hard, real asset, and are allocated across many different classes and types with various growth rates, yields, time frames, and even locations.
Direct asset allocation requires a plan. You can't just jump into direct asset allocation, hoping for the best. Although these types of investments typically offer much higher returns compared with indirect investments, they are also riskier. That's why I have a plan and I stick to the plan.
Here are 8 steps to create and execute a direct buying plan that will reduce your risk:
Know your investment criteria (i.e. when you buy and why)
Get cash for investing by converting lazy assets (or assets that aren't earning) into cash and/or making more money
Scout out opportunities
Learn about the opportunities and educate yourself
Create a team with people who've done what you want to do
Find field partners (experienced professionals) to act as point people, provide access to the direct asset investments and to help manage the asset
Conduct due diligence (i.e. determine the opportunity and the risk)
Make decisions and take action
For example, I recently invested in a restaurant. Now, I didn't know the first thing about the restaurant business so I called upon my team and I pulled in a few more people that had experience with restaurants.
Rather than try to figure it all out myself, I depend on bringing in the right people who have the kind of experience I don't have. But, I don't rely entirely on them either. I learn and educate myself about the opportunity in all facets until I have enough information with which to make a solid decision.
Then, I decide and take action.
With the restaurant, all of my due diligence and information pointed towards a great investment. The numbers, both in terms of the cost of the investment and the return on investment, met my investment criteria (or what I call my Money Rules).
Finally, I did what you or I will always have to do: I trusted my gut and made a decision to become a direct investor in the restaurant. Now, I can honestly say that I "own" a restaurant (along with a bunch of other investments, of course). More importantly, I have added another asset to my investment ownership and further diversified my holdings.
Nothing is risk-free and, even with all my homework the restaurant business is tricky. But by following through with due diligence and taking action, I've added to my multi-million dollar individual investment portfolio.You can do this too, regardless of where you are today.
You may not be investing $100,000 in a restaurant but by understanding your money rules and following the steps above, you'll increase your asset base and be in a position to use those assets to purchase additional assets. Before you know it, you'll have a multimillion dollar individual investment portfolio.
1 comments:
I believe the above is sound advice--as I first read it in a book by Loral Langemeier called something like 'Wealth Cycle Investing'. If you're going to lift the material directly from another author, at least give them credit for their material.
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