The 4 rules every woman needs to become a successful investor (plus 5 Reasons why it’s time to become one!)
Dave Ramsey, a very popular proponent of personal money management, once asked Robert and Kim Kiyosaki: “Do you know what the difference is in the middle the two of you and the rest of us who teach personal finance?”
I didn’t know what he was getting at, they shook their heads no.
He said: “You both look at everything through the eyes of an entrepreneur, including your investments. You consider everything a business.”
Every investment is a business
Dave was right. You see everything you do through the prism of entrepreneurship.
What exactly does this mean?
In the investment world, this means that any investment is a business. He has his own income statement and balance reality check, must be controlled by sales and Marketing, must be profitable in order to survive, must have a team behind him and must have a vital purpose. These are the basics of a successful business, and these are also the basics of a successful investment.
Maybe at this point some of you will say“ “Yes, but I’m only buying a few shares. I don’t need all these things.”
Perfect Example. What does each action represent? An action is an action Of A company. Does a company need sales and Marketing, accurate financial statements, a strong management team, a goal or Mission and a good source of income to succeed over the years? Yes, of course I do! Yet how many people do their homework and research the basics of the company they are investing in before buying a share of that company? Very few (except those of Warren Buffett).
How to invest in a business: the 4 rules of the principle
From an entrepreneur’s point of view, here are the investment rules to respect:
The investment must put money in my pocket
First look for cash flows. Secondly, look For Appreciation. Remember that a good investor is in the process of building his asset column. Any investment that does not put money in your pocket is not an asset — it is a liability.
The investment must be autonomous
An investment cannot survive thanks to cash flows or the financing of another investment. In the business world, you cannot use the wealth of a company to keep a subsidiary alive. Every business must be profitable in itself. The same applies to investments.
Control the investment as much as possible
In real estate and business, you need to control income, expenses and debt. For investments such as private companies and commodities where you don’t control these things, do your best to actively monitor and stay informed. Never stop looking for ways to improve the investment and increase your value or the value it gives back to you.
Every investment must have an exit strategy or exit options
The rule is this: know when you are selling before you buy. This can be based on the price, the date, certain market events or personal events. For example, Robert and Kim tend to keep their real estate investments rather than sell them. But you know what it takes to sell. In the real estate market was at its peak, they were offered an extremely high price for one of their residences, operating with maximum cash flow. They sold this property and transferred the profits to a larger building, which gave them a much higher return on investment.