How To Improve Your Investment Making Decisions

Investing is an important factor in our lives and our ability to build wealth, but how do we know if we are investing or gambling? How do we know if we are making the right investment decisions?

Here are seven basic steps to ensure we make sound investment decisions.

1. Build a coalition: Review your investment decision with at least 5 people that have credibility in the investment space you are considering. Take a moment to build a coalition of experts that have a track record of success in the industry you are seeking to invest in.

2. Can you estimate your expected rate of return?: “Investments” are just speculation if you cannot calculate your expected rate of return prior to making the investment. It is crucial to analyze your investment for the expected rate of return before making the investment.

3. Consider the worst-case scenario prior to investing: It is extremely difficult to analyze risk in any investment. We cannot see what we don’t know, but considering the worst-case scenario prior to investing will help make a sound investment decision.

4. Consider the best-case scenario: In addition to taking a moment to consider the worst-case scenario, it is also advisable to consider the upside if everything goes your way. This helps you understand the risk-reward ratio.

5. Have multiple exit strategies/backup plans: It is incredibly important to guard against catastrophic results when you invest. It’s important to make contingency plans if your initial assumptions do not materialize. Having alternative courses of action on standby will be helpful.

6. Reduce your fees, expenses, and taxes: There’s a popular paradigm in the investing world that you make your money going in. The more you can control your expenses, the higher the likelihood of a successful investment. Pay close attention to your expenses.

7. Have a 3 to 10 years horizon: Investing usually takes time to fully mature. Making plans based on a 3 -10 years horizon will help you make better investment decisions.

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At your service, Victor Lofinmakin “Obsessed with Service” 2016 Top 20 Under 40 Realtor 2018 HomeLight Top 5% National Realtor 2019 Top 20 Houston Black Real Estate Association

President of Fairdale Realty, Gazette Mortgage, Penn Investments, Academy Property Management, Freedom Capital Group, and Easy Continuing Education

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