The four P’s of newb investing

This week in Todd Capital Investment Club we cracked a few barriers. We pushed through $80,000 in total assets on the stock side.  We also had a holding that pushed through 114% total return. I don’t think that we can take credit for the gains we have seen over the last year but what I think we can take credit for is positioning ourselves to pick up these gains.

I am often asked how to invest, how much money to start investing with and what stocks to buy.  Here are four Ps that I think you have to keep in mind as you start looking to put your money to work and create wealth for yourself and your family.

Preparation

Opportunities are passed over and missed a lot of times we cause we fail to control the things we can control.  The things we can control are money and knowledge.  Most of us lack the money because we spend it all on Instagram likes.  Most of us lack knowledge because we use our spare time laying out on beaches for the gram.  Instagram is the new crack. 

Most people miss opportunities daily and blame everything else but their lack of preparation.  The investment club has prepared us to be in the market at all times with big money.  When you do the work success comes to you whether you want it or not.  

What does the work look like? The work looks like about $10,000 put aside.  If you don’t have $10,000 put aside you can still invest but you can’t take gains.  You have to be in the market with money on the line learning and watching but in the meantime until you get to $10,000 you have to keep stacking. $10,000 is the magic number. At $10,000 your gains will mean something. Anything up until then and you are gambling for the big pay off on a little, like lotto ticket.

Patience

Part of being a good investor is patience.  I don’t know which book I read that in but it is something that resonated with me.  When you invest how I invest you look foolish for a long time and then you look like a genius.  You have to be willing to hold and even double down while people insult you, insult your credentials, insult your abilities and insult  your investment decisions.

You also have to be patient with your personal finances.  If you want to invest and you have a grand, you will have to be patient  until you get to at least 10.  Sorry but that’s the game.  If you hop in with less you are going to be one of those who gamble on bitcoin or whatever else is hat. Having capital and patience allows you to make stronger plays not desperate plays. Strength yields wealth, desperation yields waste.

Everyone is looking for a flip.  Especially a quick one.  I think they want the flip because they think they don’t have any money. The truth is not that people don’t have money the truth is that they don’t have patience. Since they don’t have patience they spend all their money on things that provide an instant lift like a Gucci belt or some alcohol and then try to invest what they have left over.

Priorities

Poor people invest what they have left after they consume so they are forced to start with little.  Again, this isn’t little because they don’t have money and don’t earn money or don’t have the capacity to generate more money.  It is usually little because they lack the discipline and patience to turn it into a lot, and they want to take that little and lotto ticket it.  It is also likely little because of lifestyle creep that occurs when people make more money and level up their lifestyle.  Therefore, these people look for a quick solution to deep rooted problems.

People think investing is a lotto ticket. People want to jump the wealth building process to that one wealth event. The problem with this line of thinking is that the skills it takes to prepare to invest are the skills it takes to be a good investor. Think of it kind of like sports.  The conditioning and sprinting you do to get ready for the season are the budgeting, planning, sacrificing needed to acquire capital and maintain it once you start investing.

We have hear Dame talk about flipping. Rappers and drug dealers talk about the flip.  Everyone want the flip, the 100% return, the quick home run. I think that this is noble, but I am becoming more and more of an odds guy. As I get older and I know that I must succeed I tend to go after consistent base hits as opposed to the potential strike out.

I am constantly being asked the question of how to turn a little into a lot. People with $100 bucks want to start investing, people with a grand or two want to start investing.  This is confusing to me because I have to question the motives and the character of the individual.

See if you are the kind of person that only has 100 bucks odds are that there are other serious issues concerning your personal finances.  This indicates that even if you could flip that $100 into $100,000 you are inclined to be back broke shortly after.

Part of wealth building isn’t just building it but protecting it and keeping it.  All of this works together.

Practicality

The problem with trying to turn a little into a lot is you have to aim for abnormal returns.  This requires that you put in hours into studying the market. Most people can’t do this.  Most people wont do this.  I don’t even think that it is possible. Most fund managers pick up about 12% annually.  These are highly skilled, educated, experienced professionals and they are hitting 12%. The thing is that they hit 12% on billions.  12% of a billion is hundreds of millions.  I would argue that they don’t want to hit sky high returns.  They want to preserve capital, nothch a solid return, take their fees in the tens of millions plus the 2 percent of the billion and run a safe business. If you want to outperform these people you will likely have to be what you will never be. There is a better way.

Stack until you get $10,000 then aim for a consistent 10% monthly.  If you can do this you are good to go.  I recommend that you do this WHILE still continuing to stack and build.  Then keep stacking and building until you get to $100,000.  After you get to that number then you can start living out of the profits.  Play the long game, the solid game not the quick flip game. You will pick up the habits that allow you to not only earn your wealth but keep it and pass it on.

If you are interested in investing with our club on either the stock or real estate side we would be happy to welcome you into the partnership.  Email membership@capitaltodd.com today to join.

Be great, invest well,

Todd Millionaire

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