First, think like an investor, not an accountant or an attorney. That simply means seeing the true value of something rather than just considering the original price. If you can see what someone else can’t — like how existing zoning will limit or expand what can be done with acreage – you can identify low or no risk investments.
Also, you must have an entrepreneurial spirit and a love for that lifestyle. Investing isn’t for those with a “saver’s” mentality as making money and attaining wealth are about mind control — how you view an opportunity and what you are willing to spend in order to step up the value are key.
So says Robert Kiyosaki, author of The New York Times best seller Rich Dad, Poor Dad. He explains that the more you invest with control, the more profits go up and risk goes down. In large part, this is a matter of ownership and power over outcome, something you can’t get by participating in a mutual fund or buying stocks and bonds.
Six Critical Controls
According to Kiyosaki there are six critical controls to help you manage your financial statement for an investment; they are:
• financial training or management
Although listed as number five, the most important of these is financial training as without it you can’t control the other five elements. Unfortunately, this is not something we learn at school but, luckily, in today’s global and web-based world there are many options for gaining the learning you need to become an expert at investing with control.
With respect to the other critical areas Kiyosaki identified, controlling income is about making sure there is some and that you have a say on how much that will be. Think about owning rental properties where you can set the monthly fees versus opening a savings account where the bank controls how much interest you’ll receive.
With expenses, the old adage is definitely true; you often have to spend money to make money. The point is to do it as necessary and wisely, whether it’s upgrading rental property by painting the apartments or increasing the advertising budget to see more of a product you make.
To do this, you need to be able to shift the gears in your head so that you’re seeing all the possibilities for making money and measuring them against expenses. Kiyosaki again uses real estate as an example: consider a piece of land that could be used for varied purposes, some at no additional cost.
However, if you think a bit out of the box you could build a mobile home park which, although it necessitates building an infrastructure, the costs associated with obtaining zoning changes and different capital gains taxes, has an ultimate value to the entrepreneur that is exponentially magnified.
If you don’t do these things you negatively affect your assets; remember even small changes can lead to large rewards. The learning here is that asset control can impact the speed at which your investment gains value. It’s as simple as deferring maintenance on that apartment building to keep expenses low or making the repairs now and being able to up the rental fees.
With respect to liabilities, pay cash where you can, refinance at a lower interest rate or sell equity instead of borrowing to pay off debt.
Carry insurance and consider bypassing any investment where you can’t.
New York Times Top Ten Bestselling Author, “Double Your Income Doing What You Love”