An investment strategy is a set of rules, behaviors or procedures, designed to guide an investor’s selection of an investment portfolio. Although I will share some of my investment strategies, I will leave it up to you to figure out what to do. I believe in multiple income streams and assets that grow despite the fickleness of the stock market.
What do I invest my hard earned money in? My first investment was in my first home. It was a three bedroom, one and a half bath home with a pool. It was $36,500 and it was a wreck! It was in a neighborhood where most homes were valued at $48,000. It was my savings that allowed me to assume their mortgage and my payments were less than my monthly rent. I was looking for a home that was undervalued and needed some work. I found it! I sold it three and half years later for $78,000. I took my equity and bought our dream house on the hill. It was a five bedroom, two and half bath home in the hills overlooking Los Angeles. I had a $50,000 mortgage, but it was worth $125,000. Eventually, it was valued at $750,000.
My first house was a custom built house (Los Angeles) that needed painting, decorating and some serious repairs. The owners were going through a divorce and neglected the home. It had a lot of great features and we had some work to do to showcase it. We needed more furniture and bought some antique pieces to enhance our furniture. I refinished many of those pieces and they are treasures. These are assets and ultimately could be sold to realize their value. Will I sell these treasures? I do not know, but I could.
I was working for a Fortune 100 company that provided a pension, profit sharing, benefits for my entire family. I wanted to diversify and I started buying income property. I bought a nine unit apartment building. I could leverage my down payment and receive an income each month after all expenses. Over time, I grew this into a business and bought a twenty-four unit and a ten unit. Typically, income property can yield 8-10% return on your investment per year. The real value is the sales price of the property which increases based on the income. It is a great hedge against inflation.
I built my income property into a business that provided income stability. It was my foundation to get into other businesses. My first was a fast food restaurant which provided great cash flow. I added studio catering to take advantage of food and movie business in southern California. I started to do consulting and diversified my businesses. After ten years, I sold all of them. I was faced with what to do with the proceeds. I created a portfolio of IRA, Roth IRA and brokerage accounts. It was invested in index funds, healthcare, biotech and some individual stocks.
Buying real estate at the right time is an excellent road to wealth. I cannot give you a road map to buying real estate, but never buy when values are going up quickly because it can go down just as quickly. It is better to be a seller. I sold my Mother’s condo in 2005 and enjoyed a tremendous profit. I reinvested the proceeds in real estate, but in a different market. Although it has not appreciated much, it has not lost value. This is a long term investment and it is in an excellent location.
My parents made investments in businesses and real estate. Their best investment was in my education! I was fortunate to have private school education from kindergarten through college. One of my first investments was in my children’s education. This was a value investment; it matched my values that education is important. I may not leave my children money, but I gave them the ability to make their own. I think it is far more important to help them succeed than give them an inheritance.
When I was a child, people collected stamps, coins, baseball cards and autographs. I participated in some of these collectibles and so did my children. As an adult, I collected variety of things, but never thought about their future value. My Mother collected tea cups, fine bone china tea cups. My wife collects sterling silver tea spoons. Over the years, we have accumulated silver flatware, crystal dinner glasses and serving pieces. Actually they were wedding gifts that become very valuable! I know it is boring stuff! Some day when we stop entertaining, we can either give our children some valuable pieces or sell it.
There are other valuable assets that I can sell at anytime that may yield a new income stream. In addition, I can sell art work, memorabilia, excess furniture, jewelry to name a few more. There are more although, I did not invest in these objects. Classic or antique cars, limited edition collectibles, comic books, dolls, books, records (vinyl) and figurines. What do you collect that increased in value? Almost anything old, original or first edition has value. It can be toys, lunch boxes, clocks and many other things. I recently read about vintage watches. There are Patek Philippe watches that sell for millions of dollars. I bought a good watch in 1985 that increases in value over the years.
What should you invest in? Perhaps it should be stocks and bonds, mutual funds and ETFs? Why stop there? I am suggesting creating a real investment strategy that includes everything. This is how I see multiple income streams! Will I sell everything? Probably not, but I have a choice. My Journey to Success chronicles some of what I did, but I thought I would give you more of my investment strategy. What is your investment strategy?
Photo by: Sean MacEntee
Carnival of MoneyPros at Novel Investor
Yakezie Carnival at Money Q&A
Fin. Carn. for Young Adults at 20’s Finances
Carnival of Financial Camaraderie at Faith and Finance
Carnival of Financial Planning at Darwin’s Money
What is your investment strategy?