Step 7: Ready To Invest Copy
Congratulations on making it to the final step in “The 7 Step Wealth Program”! We have covered so much in the last six steps. You have learned to keep track of your expenses and you net worth. You also got the opportunity to write out your wealth goals and break them down through percentages and the savings compounding formula. In step 5 you learned the different way to generate more income, and in step 6 you picked an investment bucket to start educating yourself on. In this last step, Mei-Jing will go over how you can mitigate risk by following her 10 proprietary rules when investing your money.
What We Will Cover in Step 7?
- Money Loves Attention
- Investing Money vs Investing Time
- 10 Investment Rules To Follow
- What is a Good Cash Flow Investment?
Step 7: You Are Ready to Invest
Finally, you have made it to the last step! This is one of my favorite steps, since it will show you how we can multiply our wealth. You can have your income and expenses in order but if you do not know what to do with what you have, then you will sooner or later end up back at the start. Remember… money loves attention. It needs to be circulating between different investments. In this chapter, we will go over the different rules to follow so you make calculated estimations rather than plain investment guesses. The goal here is to lower your risk-reward ratio. As you get older, the risk will need to be much lower than the reward as you may not have enough time to recover from the potential loss.
Please note, this step is for when you have saved up enough money to invest it into a cash flow investment. An investment that will require your money instead of your time. Allow me to explain this concept in the next section “Investing Time vs Investing Money”.
Investing Money vs Investing Time
I have added this short section to step 7 because it is important to understand the difference between investing money and investing time. In step 6 we went over the 5 different investment buckets, and you had the task to pick one bucket and a subsegment of that bucket to start learning about. Now, if you picked a bucket with a subsegment that will require money to invest rather than your own labor and time such as real estate or trading securities then these 10 rules that I have build below are for you.
When you invest money, you are trading your money for time. In other words, you are investing money instead of time and in return you are investing your money and placing the risk on an external factor to produce results for you. For example, investing in a rental property will place the risk on external factors like tenants, markets, and even weather conditions.
This produces a risk because you are investing your money on external factors that you cannot control. Therefore, I have created these 10 investment rules to follow when investing your money to help mitigate your risk as much as possible.
Now, if you choose an investment bucket that requires your labor and time instead of money then you will not have to follow the 10 investment rules below because the risk will be place on your own ability to succeed.
This is because, if you are investing in a bucket that requires that you invest your time instead of your money you are investing in your own ability to create results. The only risk you have is the risk of giving up before arriving to your end goal. Out of the 5 investment buckets the one you will need to trade time for money is the royalty bucket like starting a business, creating an online course or writing a book. It can also be in some cases the digital real estate bucket like creating YouTube videos or an ecommerce drop shipping store. If you have picked one of these investment buckets to start with, then the 10 rules below will not apply to you until you have accumulated enough money to invest in the other buckets.
Investment Rules to Follow
Make sure you invest wisely. Investing is an art, and there are many rules to follow. If you invest your money in the wrong places, you will quickly lose it all. I have made multiple investment mistakes and have lost plenty of money through this learning process. However, my “worst” failures have been my greatest rewards from the knowledge that I gained from them. To save you some time and money, watch the video below to learn about the 10 investment rules to follow.
These are the golden rules that you must consistently follow. Which one was your favorite investment rule to follow? Keep these rules close to you and follow them every time you are looking to make an investment move. It will save you a lot of time and money.
Now let’s dive into, what is a good cash flow investment.
What is a Good Cash Flow Investment?
Have you ever heard the phrase; ‘cash flow is king’? Cash flow is the secret formula to reaching financial freedom. The question is, how do you know if an investment is a good cash flow investment? How great an investment is will be determined by the return that you get from your initial investment. For example, if you put in $20,000 for an investment that will generate you $250 a month of passive income, that means you will have earnings of 1.25% which is an annual return of 15%. This is a great return on investment. Keep in mind, the average healthy index fund gives you a 10% annual ROI (return on investment).
It is important to understand that you can move your money to a new investment if your current investment is not generating a high enough return. You can look at the percentage of return each investing is generating. For example, if you come across an investment that will generate you 15% return, and your current lowest investment in your portfolio only generates 10% ROI (return on investment), it would be smart to sell off the low-generating investment and move your money to the higher ROI investment.
Please note, liquidity means that you have extra cash on hand which gives you an opportunity to invest it on a solid residual investment. As a result, you can jump on the opportunity without taking money from other investments. The more flows of cash that you have, the better. The goal is to diversify while it grows. Just remember, the more money you put into an investment, the higher the cash flow that you will receive from it. The goal is to stick to investments that cost a minimum of $25,000 USD.
Step 7- Ready to Invest Action Items:
This was a super fun chapter; one of my favorite steps in this program. Here are the action items that you must follow:
- Learn and memorize the 10 investment rules like it is your financial Bible.
- Understand the difference between investing money and investing your time.
- Understand what a good cash flow investment is and how you should move your money around.
“The more you experience, the more you can offer others”
-Unknown
Congratulations!!!
You Have Completed “The 7 Step Wealth Program”!
Now that you have completed the seven steps of this program, it is up to you to stay with it. Start by engraving finances into your blood. Build strong habits around finances and investments. Remember to stay focused and disciplined when pursuing your wealth goals for financial freedom. To reach financial freedom, it will take you a minimum of ten to twenty years to reach. We are here for the long run. Be mentally prepared to build your wealth incrementally through consistency, focus, and perseverance. These are your keys to success.
You have completed this final section. Take your notes and answer the final questions and you will receive your “7 Step Wealth Program” course certificate.