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- 📈🏆 The 5 Traits Of A PERFECT Investment
📈🏆 The 5 Traits Of A PERFECT Investment
... And Is Investing Risky? 💭📉🔍
Newsletter Content
Here’s How The Market Has Been Performing*
Name | Current Value | 1 Week Return | 1 Month Return | Monthly Average |
---|---|---|---|---|
DJIA | $40,000.90 | 1.59% | 3.33% | 1.37% |
S&P 500 | $5,615.35 | 0.87% | 3.58% | 2.13% |
NASDAQ | $18,398.45 | 0.25% | 4.49% | 2.68% |
Bitcoin | $57,230.64 | 1.31% | -16.13% | 7.36% |
Ethereum | $3,096.09 | 3.90% | -13.02% | 5.45% |
*As of Close of Current Market Week
Our Favorite Unbroken Investments
Name | 1 Month Return | Monthly Average |
---|---|---|
Fund 1 | 3.12% | 10.75% |
Fund 2 | 12.17% | 13.75% |
Fund 3 | 24.64% | 16.49% |
Fund 4 | 1.00% | 4.91% |
Access these investments by joining the Unbroken Investing community. |
Unbroken Insights
How do you know when you have found a great investment? It is important to have an idea of what a great investment looks like. Following are the 5 most important traits to look for when evaluating potential investments.
First, we need to review what happens to the principal over time. For example, if you invest $10,000 there are many things that could happen. Here are the possibilities:
At the end you get back the principal. This is most common when making loans or investing in CDs or bonds. You collect interest and at the end you get your $10,000 investment back.
The principal can go up or down. When you invest in the stock market, you could get back almost any amount…higher or lower than your original investment.
The principal primarily goes up. Some good examples of this are real estate and gold. Yes, real estate prices have declined from time to time, but that is rare, especially over the long run.
The principal gets depleted or is gone. One good example of this is an annuity. That $10,000 could turn into a payment stream of $100 per month for the rest of your life, but you cannot get that $10,000 back…just the payment stream. One of the best cash flow opportunities we have found pays about 10% of the initial investment per month, but you do not get that investment back… just the payment stream.
Another trait to evaluate is the cash flow. Some investments, like owning gold, do not create any cash flow. Most stocks have little–if any–cash flow. (One exception to that are dividend stocks). Other investments that typically pay cash flow are loans (private loans, CDs, bonds, etc.) as well as rental income from real estate.
The third trait to evaluate are the tax benefits. Are there deductions when you make the investment? How is cash flow taxed? If you sell for a profit, are gains taxed as income (which is usually a higher rate) or taxed as capital gains? Real estate is one of the best investments because you get several different tax advantages.
Those first three traits are the most important traits to use when you evaluate the performance of an investment opportunity. The last two traits have more to do with the ease of using the investment.
The fourth trait to evaluate is the ease of acquisition. There are a couple of items to consider here. One is the minimum investment amount. It is easier to invest in something with a $1,000 minimum than something with a $100,000 minimum. The other is the time required. Although stocks are not my favorite investment market, with technology today, it is the easiest one to invest in. The minimum is low and you can transfer funds to it almost instantly.
The final trait is liquidity. How quickly can you withdraw gains? How quickly can you withdraw the principal? This is one of the few disadvantages of real estate. If you ever want or need the funds back, it takes time to find a buyer, sell the house, and get your funds back.
With that said, what is the best investment? No investment is going to be perfect in all five categories that we’ve examined - but the best investment for you should be defined as the perfect investment for your needs and current financial situation. A good starting point is to evaluate each investment’s standing with the five criteria and compare them to your goals. We provide further tools on how to complete such due diligence in the Unbroken Investing community.
Is Investing Risky?
How safe is flying? It depends.
From 2009 to 2014, less than ten people died in airplane accidents in the US. That makes it statistically, very improbable.
But… what if you were going to get on a plane with ME as your pilot? I have never flown a plane. I have never taken a lesson on flying. Would that be risky?
Absolutely! The odds of a successful flight would be almost zero.
Why do I bring this up? Because investing is very similar to flying. Is it risky? It depends who is the pilot of your money.
An investor who is educated and experienced… and knows how to handle turbulence, usually has a low-risk portfolio. I am not referring to low-risk like US Bonds or bank CDs. I am referring to low-risk investments in businesses and real estate. They know how to get great returns but with much lower risk.
However, most investors do not have the education and experience, so they try to earn similar high returns but often do so in a risky way.
For example, assume you are trying to double your money in the next twelve months… what would you invest in? Most people would assume that they must make a high-risk investment in order to get such high returns.
I made an investment last month that I KNEW would double within about one month…and it did. It was a company that was about to have an IPO and I was able to invest in preferred convertible bonds that automatically converted to shares of stock at a 50% discount off the market share price. My $100,000 of bonds converted to $200,000 of stocks. That is low risk investing!
So… what is the difference between risky investing and low-risk investing? One key difference is education. Understanding how to assess opportunities is essential. How can you tell a risky investment from a low-risk one that appears “too good to be true”? That is why one of most important features of our Unbroken Investing community is education. We want you to become an Educated Capitalist (that is the name of our weekly education call).
How risky is flying? Very low risk if you have an educated and experienced pilot. Very high risk if your pilot has no education or experience.
How risky is investing? Very low risk if you or your advisor is educated and experienced. Very high risk if you or your advisor has inadequate education and experience.