Couch Potatoe Investors; Brace Yourselves

My financial education as been non-traditional at best. In fact, I follow a much different path than the majority of the people. I do not save my money; I invest it. I do not invest in stocks for the long term; I'm in and out in a matter of days to maybe weeks. I do not pray for the market to go up; I can make just as much if not more when it goes down. I purchase real estate for cashflow; I pay little attention to appreciation.

If you follow a different path, investment wise, my strategies may upset you. I may seem irresponsible. Well, from my side of the fence, the way the vast majority of people invest, does upset me. I recently purchased a Canadian personal finance magazine. While reading it, I found myself yelling at the pages as if the author could hear me. They have been referring to the impending drop in the market. It's no secret that the market as been going almost straight up since 2008-2009. The market normally moves in wave, but this one as being going almost straight up. It's been tempered with. It's not sustainable. We are due for a correction, and that is what the authors of the magazine are referring to. In fact the market can drop 40% and still be in a upward trend. The question is can you handle such a drop?

Well that is what they are covering in this magazine. The one article is preparing for the "couch potatoes" investors to brace themselves. The author describe the couch potato investor as someone who holds a variety of investments in stocks, and bonds for the long term. He describe how that investor as being enjoying an amazing up move and is preparing them for the down move to come. He suggest that the best investor will demonstrate discipline in the time coming. And the discipline he is referring to is to maintain the couch potato strategy and keeping everything in the same investment without touching them.

That is right! He is suggesting you stand by as your investment disappear by 40%. So if you have $100,000 in investment and it drops by 40% you would be left with $60,000. From that starting point if would need to go back up 67% just to get back to $100,000. That is the problem with large drawbacks on your investment account; and I am not even looking at the fees occurring during the drop as well as on the way back up.

The truth is, I don't believe that the author is trying to help his client lose their money or retirement savings. I would believe that he is providing the best advise he can. If the average investor pulled out their money in a moment of panic, they will have the tendencies to do it near the bottom when they feel they can no longer take the pain. In most situation our emotions leads our investing actions, and we are emotionally wired to lose it all.

It is also a fact, that this particular author is an investment adviser and he gets paid by the commission you pay on your investments. It is in his best interest, and the best interest of his company for you to continue paying those fees. The magazine's top ad buyers are banks and investment companies.

I feel the best solution would be for the investors to educate themselves, following the same non-traditional methods I have before trying to take over their investments. I agree with the author that jumping from one type of investing strategy to an other will  only cause you to lose. Learning to manage your own investment is not rocket science but it does require some time. The majority prefer not to take on such responsibilities. Some of us, don't even realize that's its out there.

Education And Continuing Education

If you know me or have followed my blog at all, you know that I have invested a lot of time and money towards my education. My investing education that is. My husband and I started our investing career by taking extensive courses on the stock markets as well as real estate investing.

Success can be achieved without a formal education. You can learn to invest through experience. In fact even if you start with a more formal education, you still need experience to succeed. Its a necessary step. I have come across many successful investors that obtain their level of success on experience alone. They would come across and complete one deal. Then they would repeat the process. They would learn new things along the way that they can apply to their investment strategies. Slowly they build a portfolio of investments and are doing quite well.

So why didn't we do it the experience way? Well for one, I lacked the motivation to start and the knowledge to even know it was possible. My education first opened my eyes to the possibilities. I had a preconceive notion that investing in stock and real estate was out of my league. So I never attempted to invest. I concentrated more on getting a job and saving, which I now know wouldn't have gotten me very far. Mostly if you take in consideration the crippling injury my husband would sustain along the way.

Also, the time frame to reach success without formal training is much, much longer then through education. You only learn the lessons when you come across them. You only learn what not to do after you've done it. And if the mistake wasn't too costly, you can keep on going. I have paid a lot for my education, but the truth is that those who have learned by trial and error have paid more then me.

Remember, my education also comes from trial and error; but they come from someone else doing the trial and error and I learn from their experience. I can avoid pitfalls and costly mistake. I also get a vast source of information right from the get go. Experience and action are still required to reach success, but the path as been paved ahead of me making the process that much easier.

A good thing about formal education, is that you can acquire it at any time and at any stage of your investment career. The more experience you have the more habits you will have formed and you may need to change a few of them. Your ego may be your biggest obstacle. However, isn't it comforting to know that it is never too late.

I am of the belief that we are never done learning. The minute you quit learning is also the time you will quit growing. Rules are forever changing and there is always room for improvement. So it is important to dedicate a certain amount to education all throughout your investing career. It is true that a larger portion should be dedicated to education in the beginning when your knowledge is more limited, but as your expertise grow, you should still dedicate to learning.

There will be a time, when you have acquired a good foundation to your investing knowledge that you should start branching out into other topics not as directly related to investing. Such as business, accounting, sales, and so on.

In fact, now that I have taken almost every course available to me on the topic of real estate investing and stock investing; I have started branching out in educating myself in other aspect of my business.

I have started a course on branding and marketing. Now that I have the skills to invest in real estate, I need to concentrate on finding investors and joint venture partners. I need to learn how to find them, how to make them see the value in my investment opportunities. I am really enjoying this course and see tremendous value in it. I am also glad that I didn't try to add in on sooner. It was important to first develop my skills and then grow my brand.

I am also taking a course on sales and negotiation. Some people are natural sales people, like my sister for example. But I lack her skills in that department. Sales and negotiation doesn't have to be a skill you were born with, it can be learned. This courses is a big eye opener for me. I have a very nurturing personality so pushing for a sale is very hard for me. In fact I would have trouble getting to the topic of sale at all. I had a wrong perspective on this. I saw a sale as me winning, when in fact it is to my investors/partners advantage to get involve in the deal. I just also happen to benefit as well. I was of a thinking that if someone was a winner the other was the looser.

I have also added trainer's courses. This class teaches me to train and present. At this time, my speaking engagement are not the main focus of my business, but training always was. I am not teaching investment to the masses at this time. I do however need to educate my realtors on the strategies I am using. I need to educate sellers on the benefit of a VTB (vendor take back). I need my mortgage broker to understand the process of a Lease Option (rent-to-own) and how to do it properly to protect all the parties involved.

I have learned that the way I perceived the information I am presenting can be very different from the way it is received. You want to present the information in such a way that the receiver is always with an open mind. If you trigger a concern, your message is no longer going through. For example, if someone approaches me and says "How would you like to make more money?" my brain screams MLM SCAM and I quit listening. There is a technique and path to follow to get the message through without triggering a gut reaction that way.

My new education is fascinating. It is not investing related per se but it is very valuable to my business. I do have a lot on my plate with these courses and it unfortunately have kept me away from blogging. Think however of all the more information I will have to share with you, so that you too may benefit from my knowledge and help grow your business.