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- Investing Mistakes to Avoid Right Now
Investing Mistakes to Avoid Right Now
...And 5 Steps to Financial Freedom in 5 Years
Unbroken Investing
June 22, 2024 • Estimated Reading Time: 7 minutes
Newsletter Content
Here’s How The Market Has Been Performing*
Name | Current Value | 1 Week Return | 1 Month Return | Monthly Average |
|---|---|---|---|---|
DJIA | $39,150.33 | 1.45% | -1.81% | 1.28% |
S&P 500 | $5,464.62 | 0.60% | 2.69% | 2.12% |
NASDAQ | $17,689.36 | 0% | 5.08% | 2.58% |
Bitcoin | $63,971.05 | -3.39% | -8.79% | 9.42% |
Ethereum | $3,505.35 | -1.02% | -7.49% | 7.11% |
*As of Close of Current Market Week
Our Favorite Unbroken Investments
Name | 1 Month Return | 1 Year Average |
|---|---|---|
Fund 1 | 5.01% | 13.65% |
Fund 2 | 17.03% | 11.94% |
Fund 3 | 14.32% | 10.51% |
Fund 4 | 8.82% | 9.05% |
Access these investments by joining the Unbroken Investing community. |
Unbroken Insights
What is the Economy Going to Do Next?
Half of the “experts” point to high inflation, rising credit card debt, and shrinking savings as indications that a major recession is coming soon. Others look at the strong jobs reports and earnings reports as signs that the economy is picking up steam.
With that uncertainty, what are some of the biggest investing mistakes you need to avoid right now?
1. Overconcentration in One Area
Do not concentrate too much of your investing in one area. Everyone talks about diversification, but I am taking it beyond that. Do not diversify just in the stock market (in case it collapses). Diversify into other markets. One example is agriculture because we will always need to eat. Find investments that will continue to pay even if there is a recession, the stock market collapses, or real estate prices drop.
2. Focusing Only on “Buy Low and Sell High” Investments
Do not focus solely on "Buy Low and Sell High" investments. If/when there is a recession or market correction, these are the assets that lose the most money. However, when you invest in assets that pay cash flow (positive returns!) regardless of what the stock market does, you protect yourself and assure yourself of gains.
One good example is real estate. Between 2002 and 2006, I advised many people to invest in rental real estate. When real estate values plummeted in 2007-2008, I had this conversation many times:
“Hey Steve, real estate values are really dropping. Should I sell my rentals before it is too late?”
“Do you remember why you bought the rental properties?”
“Sure. I bought them for cash flow.”
“Are you still collecting rent?”
“Well…yes.”
“Then why would you sell something that is paying you cash flow every month?”
“Oh yeah…good point.”
Real estate is one example of assets that can pay you monthly regardless of what the economy is doing. Some other examples we have found are in mining (crypto, gold, oil, etc.) as well as trading accounts that profit from volatility (instead of the Buy Low and Sell High strategy).
3. Doing Nothing
The biggest mistake you could make is doing nothing. Too many people sit around with their money in a bank (losing value due to inflation) waiting for the perfect investment and the perfect timing. Nothing is perfect. You are better off taking action, diversifying, and making gains than sitting there afraid to make any mistake or suffering from “analysis paralysis.”
4. Not Having a Plan or Goal
Another big mistake now—or at any point ever—is not having a plan or goal for what you are trying to accomplish with your funds. What is your objective? If you cannot answer that question VERY SPECIFICALLY, then there is absolutely no way you can invest and get good results. How would you even know if the results are good or bad if you do not have a target to compare the results to?
These are some of the biggest investing mistakes to avoid right now. As always, we are happy to help you avoid the mistakes—and more importantly—find the successes that can get you where you want to be financially.
Creating financial freedom in 5 years is not as hard as you might think. It’s just a simple 5-step process…and the discipline to stick with it (that’s the hard part).
Step 1: Identify Your Target
Determine where you are (assets, liabilities, passive cash flow and expenses). Determine where you need to be in 5 years to have financial freedom. In other words, how much monthly passive cash flow do you need to cover your expenses?
Step 2: Automate
Create a bank account that is ONLY for investments. As you generate more passive cash flow, you want it going here (to reinvest in more assets) instead of getting mixed—and probably spent—with your normal monthly income and expenses. Automate the direct deposits you receive into this account. As much as possible, automate the investments you make going out of this account.
Step 3: Start Investing
Focus on the higher return assets first. Understand that these returns will not last forever. But, as your cash flow increases quickly, it creates more funds that you can use to invest in assets that will pay you for longer.
Step 4: Monitor
As your assets provide more and more passive cash flow, you will want to continue reinvesting that cash flow into more assets that create passive cash flow. Not only does this make your cash flow “snowball”, but it also gives you diversification.
Step 5: Flip the Switch
You can stop working and live on passive cash flow. BUT, keep this in mind…you do NOT want to stop working when your monthly passive cash flow equals your monthly expenses. You want to continue growing your passive cash flow until it is 150% of your monthly expenses. Why? First of all, you want to continue investing that extra into more assets that create long term passive cash flow (like real estate and agriculture) so that your passive cash flow lasts forever. Second, your expense budget should always be less than your income. That is the biggest reason most people never start creating wealth…because they spend every penny they make. Do not let that be you!
We do this for investors all the time. If you want help creating your plan or with selecting the investments that pay passive cash flow, please reach out to us.