Tonight I joined in on a zoom call one of my investing coach friends runs. The call is centered around real estate investing, but while on I made a point about investing on a whole and the base level rules to all of it.
Time, Compounding, Minimum Acceptable Return.
I feel like what makes investing difficult is not the lack of understanding, but really impatience and greed.
Don't get me wrong we all want to make money faster and larger, myself included. The reality is though, the power of compounding is a sure fire way to attain substantial wealth with relatively conservative investments producing what are considered boring returns.
Time can work for you or against you. When I was in my twenties I was so busy working toward getting rich in a year or two trading stocks that I spent 8 years building zero wealth.
That is a substantial amount of time for a compounding snowball to have already been rolling.
Time and Compounding. They can be your best friend or your worst mistress.
This brings us to minimum acceptable return. When talking real estate and rental properties in particular then it is simply knowing what cash on cash percentage return you want on your money. Then you go and only buy properties that meet that return. Yes, it is actually that simple. Is it always easier to find properties to meet the return, no it is now. What is easy though is you only making offers at prices that meet your returns. Keep it simple. It is what I do with my real estate investing.
With other investments, like said fixed instruments who have parameters you are stuck playing in, but they question is do any of those options pay a return that is acceptable to you. And furthermore, is there a way to compound that return.
This simple perspective I wish I'd of focused on in my younger years. So much further on the financial journey this cat would be,