Your Wealth Cycle -- Direct Investing

Hi,

Thank you all for your great questions during our chat in my GroupSpace. We will do it again, soon.

Several of your questions were about direct investing. This is a great time to talk about it again. It will be a cornerstone in your Wealth Cycle, and we all need to be having the same conversation.

Our conversation here to-date, has been about getting started-- the first three building blocks and your vision in launching your Wealth Cycle: Assets to income: Income to assets.

On investing, I talk about what I call “Park and Pray,” how people PARK their money in traditional Wall Street stocks, IRAs or 401(k)s and PRAY for financial security down the road. This is a plan for poverty. In my wealth-building community, Live Out Loud, we show how to invest directly in assets with double-digit-returns. Yes, double-digit returns, with no middleman taking a cut of your money. We call this Wealth Cycle Investing, and it is how you generate the cash to invest in more assets, build your passive income and fuel your Cash Machine.

I don’t know about you, but if I am going to make the effort to invest, I want to get wealthy doing it. Why should I own big oil or gas company stocks, when I can own the wellheads directly? Why own stock in any company, when I can own the company?  This is what Wealth Cycle Investing is: owning the assets directly. You can be an active investor, very involved in the operations, or a passive investor, providing capital and trusting the management team. Either way, you are never distanced from your investments.

Real estate is one of my direct investments, one of my favorite asset classes. While there is no such thing as a sure thing, I do like the surer things. But there are several other opportunities out there such as private equity ventures involving new products or private businesses—any venture that does not have its equity or debt available on the public markets.  I mentioned oil and gas earlier. As I said I don’t own the stocks, but the wellheads themselves. My team in this asset class is richly diversified, so that I have the opportunity to make strong returns, while managing my risk. Then there are the alternative assets investments like private equities, promissory notes and truly self-directed IRA’s. Once you start thinking differently about how you invest, you will discover and be scoping out new opportunities constantly.

Let’s address the question that I am often asked, “What about risk?” In Wealth Cycle Investing risk is mitigated in several ways. The two most important are in building your team and doing your due diligence. I keep hammering away at this team concept. Building a team and leading it are critical to ALL aspects of your Wealth Cycle. Especially when it comes to risk. Having a team reduces risk. Work with others whom you trust and who have experience and knowledge about the investments you are considering. This will increase your upside and reduce the downside. Collective knowledge and experience lowers risk and accelerates diversification. My investments are well-diversified both across asset classes and through diverse investments within each asset class.

Make sure you due your due diligence before investing. Kick the tires. Ask the questions. Check under the hood. Whatever the metaphor, learn as much as you can, because this knowledge reduces risk, as well. And again, team. Put the lawyers, financial analysts and accountants on your team to work verifying the details in any deal.

And one more thing on risk: think about this. Are you better off owning assets, being involved in the operations and knowing what’s going on or when you park your money with a broker who probably knows little, beyond the numbers, about the companies behind the stocks. Me? I’ll take getting down and dirty any day and knowing what’s up with my money.

Everyone will have different Money Rules, as I call them, based upon their own financial situation and objectives, their risk tolerance and their needs for cash flow or appreciation. Once you know where you are and where you want to go, you have your Money Rules that will inform your investment decisions and be the compass that keeps you on track.

Wrong conversations around accreditation can also be roadblocks to direct investing for some. Yes, the SEC still sets standards, but they were set way back in the Depression when a net worth of a million dollars or a $200,000 annual income made the barriers of entry into the ”rich man’s club” insurmountable for just about everyone. The right conversation on this is, if you don’t have the assets or income to be accredited, make more money by first getting in on direct investment deals that don’t require accreditation.

This is a new approach to investing, and its time has come. You will be amazed at how many doors are open to you for direct investments. Once you get into Wealth Cycle Investing, you will be more in control of your financial future than you ever thought possible. And remember, anyone can do it.

To your wealth,

Loral Langemeier 

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 Loral Langemeier is the founder of Live Out Loud, a coaching and seminar company that teaches wealth building techniques. Learn tips from the financial strategist at The Millionaire Maker.  Please join us by clicking here.