How To Get Started - 5 Tips On Investing For Beginners
Stop saving your money. Why? Because poor people focus on saving and rich people focus on investing.
This is how most people save. They don’t drink that Starbucks coffee in the morning. They don’t fly first class, they fly economy.
Well, here’s the thing: You’re not going to get rich by trying to save a few dollars here and there. You don’t have a savings problem, you have an income problem. If you want to earn a lot more money, you need to learn to invest so here are five quick tips.
The Simple Investment Rule
Say you don’t have a lot of cash coming in, and you want to have $2000 to $5000 a month in positive cash flow. You need to acquire quite a substantial amount of real estate in order to do that. A business that makes $3000 to $20,000 will get you to your goal faster.
So, my first recommendation is you build your business first. When you business throws out so much cash that you have reinvested a lot of profit into your business, then you take that extra money and put it into real estate. Then you wait.
Long term, if you buy right, you will become extremely wealthy.
The next tip is my simple investment rule. 100, 10, 3, 1. It means you look at 100 deals, 100 potential investments, and break it down into 10. From that 10, you will narrow it down to three that has got possibility and then you might do 1.
Every day, I turn down 99.9% of the investments that come across my desk. I look at hundreds and hundreds of investments and I do only a very selective few. Always remember investigate before you invest.
How To Get The Income To Invest
Now here’s what’s very, very interesting. I know a lot of people who do very well with investing and they don’t even have a scalable business. You can be very wealthy with a high income skill that makes you more than $10,000 a month, and you put it into high return investments.
A friend of mine who is a high end photographer makes six figure income a year, and he started investing in real estate 20 some odd years ago. Today he has a portfolio of about 250 units. It’s worth about $20 to $25 million dollars.
First, you’ve got to know what type of investor you are. Are you more for growth, are you more for capital gains, are you more for security, do you want dividends? All of that makes a difference.
I like control when it comes to investing so I prefer real estate over stocks. I can’t call a CEO and tell him where to invest money. That’s why I like businesses. I put money in businesses because I have a say over where the business could go. That’s why I like real estate because I have control for tax purposes. I have control over the cash flow and the appreciation.
So if you’re making less than $50,000 a year, save 10 percent of your income. If you’re making over $50,000 save 15 percent. If you’re doing $200,000 or more, save 25 percent. And if you’re doing half a million or more, save 35 percent. When you’re making 2 million or more, save 40 percent. And finally, if you’re making 5 million or more, you should be saving at least 50 percent for investments.
The rest you can spend on whatever you want. Reward yourself. But you need to increase your earning ability through a combination of your scalable business and your high income skills.
Dan Lok: Welcome to another episode of Dan Lok show. Today we are in actually New York City, and I’m with John Henry. Now John not only is an entrepreneur, but also a real estate investor as well as owns a venture capital company.
John Henry: That’s right.
Dan Lok: Now before we even talk about John’s story, I want to talk a little bit about this space.
John Henry: Let’s talk about it.
Dan Lok: Let’s talk about this space. Like what makes this space, co-working space, so special?
John Henry: First things first, thank you for having me on.
Dan Lok: Welcome man, welcome.
John Henry: Appreciate you. And look, what makes this space special is this is the proof right here. Like you’re on a one day trip, you came, you interviewed with Faiza, this content, that content lined up. We connected and it’s central in the city, a lotta energy here, there’s six floors.
Dan Lok: You can feel the entrepreneurial spirit.
John Henry: That’s right.
Dan Lok: The minute you walk in you can feel the hustling.