Real Deal REInvestor Network

LIMITING BAD INVESTMENT DECISIONS

Well we have certainly heard it all in recent months: the recession is over, the stock market is recovering, and foreclosures are down.  Nationally, spin doctors continue to spew this propaganda, while the facts are blatantly obvious:  unemployment still continues to add to the body count (summer jobs don’t count) millions of homes continue to move forward in the foreclosure process (although the timeline from start to finish is well over a year nationally) & as for the stock market; markets in China & Europe are delivering up to $6 to $1 compared to the U.S.  For many this happy news simply makes it more difficult to identify a solid investment option.  Or does it?

Even with all the carnage, or perhaps because of it, there is no better time to invest, specifically in Real Estate.  I believe it was Warren Buffet who mentioned something about capitalizing “when there is blood in the streets”. He may know a thing or two.  The issue most face in building wealth is limiting bad decisions (yes even the best make them) or limiting those short term/sighted decisions that create long term adverse effects.  At the root of these decisions: our EMOTIONS.  

A recent Barclays Wealth Global survey noted a large percentage of wealthy investors ( a pool of approx 2000 w/estimated net worth ranging from 5-15mm yearly) not only realize their tendency to make a decision based upon their emotional state, but would welcome help in dealing with the problem.   The most successful @ dealing w/ “failures of rationality” utilize a set of control strategies to limit these moments or lapses in good judgment.   

As a purveyor of time tested & proven real estate investment strategies I have found these control strategies particularly helpful in establishing viable & sustainable investing plans.  Of course no one is perfect & there is always some risk, however, incorporating these seemingly trivial strategies into your daily routine may just save you from yourself:

1.)  Establish & use rules to help (yes even entrepreneurs need rules) make better financial decisions; like spending only out of income & not capital. 

2.)  Set financial deadlines; like saving a pre-determined amount by years end.

3.)  Refrain from impulse investing; i.e. wait a few days after making a big decision to execute it.

4.) 

Perhaps most important is: Use others to help you reach your financial goals.  I am passionate about real estate investing as a means to build wealth; yet I realize that without my power team in place to identify, analyze, & manage the acquisition & sale process (just for starters) my dreams of blue skies & white sandy beaches, may very well turn into a nightmare on Elm street!