Are you looking to increase your investment returns this year and to do it with speed and accuracy? Is so you have come to the right place.
In this article, I will share with you ways to help you revamp your financial planning and boost your investment returns. I will cover all the following in this article:
-Purpose of investing
-Investment Checklist
-Analysis
Before continuing, I would like to share a story I heard from a well-known author and businessman who is worth around 15 million dollars or more. As I listened to his business audio program, he talked about two investors who were both reasonably skilled at investing but had different investment performance returns.
One investor would make significantly higher investment returns then the other but both were well trained and knew the ins and outs of investing.
When an assessment was done it was determined that one investor had better returns because he had a stronger purpose for investing and did not ever deviate from his investment checklist when measuring and analyzing if he should invest in a particular investment or not.
The other worst performing investor did not use his checklist or only parts of it in analyzing investments.
The key takeaway in this story and how you can boost your investment returns is by having a real purpose for investing, creating and never deviating from your investment checklist and doing through analysis on an investment of interest.
Doing these 3 things will help dramatically improve your investment returns this year.
An investment of mine so far already this year has given me a return of 23%.
I’m no genius like warren buffet but I do know the more competent a person is and ensuring a proper way of assessing investment improves the chances of success.
For a complete guide to wealth creation as this will also boost your investment returns checkout article here.
Purpose of Investing
The modern purpose of investing is to get a reasonable return on the money used to invest in a particular thing. When investing reexamine your purpose of investing to ensure it is something personal that drives you and a serious interest.
When your purpose is strong it leads you to investing and performing at a higher level then the vast majority. Often successful investors invest with the future in mind to help them make choice now as to how things are predicted to be in the future.
Use these signs as listed below as ways to asset yourself or align with to become or continue being a purposeful investor.
- Purpose of investing is clear and extremely personal
- You have or are willing to make an organized path to guiding your investment decisions
- You have a clear measure of how to assess and track your progress
- You have a follow up plan, in advance, for situations that can negatively impact performance
Other benefits of investing with purpose is that you should by nature want to be the best or one of the best at whatever sector of investing you choose to invest in.
If not, possibly reconsider the investments you invest in because a passionate and well in depth investors will run circles are other investors who are just trying to make fast money with no real purpose but for short gains.
To understand the basics of accumulating wealth read this article and it will help deepen your understanding of purposeful investing.
Do all the following for action steps toward maintaining or developing a real purpose for investing.
Step 1: Decide and write out on paper exactly what your purpose is for investing
Step 2: Find sources that are trustworthy for compiling information that you can them sort through an establish your own investment identity and guide to help you through the investment journey
Step 3: Establish exactly how you will assess and monitor your progress when investing
Step 4: Create a follow up plan so you can respond effectively in the event something may disrupt or negatively impact your investment returns
Investment Checklist
A investment checklist is simply a list of items to observe before moving forward with an investment.
A brief example, with real estate, is in the following: (Using Real estate as an example but you can do this with any investment)
Sample Real Estate Checklist for apartment investing:
– Occupancy 90% or higher
– Positive cash flow last 7 to 10 years
– Is the real estate of interest in a city that is on the top 25 list for fastest population growth
– Is the real estate of interest taxes are all paid up to the current date
– Is real estate of interest near big companies that employ thousands or hundreds of thousands of people
The above is just a brief snapshot of what an investor who is looking to invest in apartments would observe before looking more into buying their targeted real estate. This checklist is meant to maximize their actions in choosing a profitable real estate investment.
You can make a checklist for any investment like bonds, mutual funds and individual stock. Once you have your checklist as you grow more intelligent over the years you can alter the checklist to match the new knowledge you have and hopefully get higher returns.
Creating a checklist does not have to be complicated. It is better to use a simple checklist with items that are not hard to understand.
If you are just beginning and don’t know enough to make a checklist then dedicate the next few weeks to aggressive study, 20 to 30 or more hours a week, of the sector of investing you want the checklist to be for and customize your checklist to match your investment needs.
When making and completing your list you can decide on the percentage of the overall checklist you consider to be a move forward indicator.
In the previous checklist example, there were five items on the investment checklist so if I make the move forward indicator 4/5 or 80% of completion of checklist then this is the threshold in which I would either invest or look deeper into the targeted apartment real estate investment.
Your investment checklist is just as important as reading learning material so you can then use knowledge to form your checklist that will serve you in your investment journey. Read this article here for the best or upcoming books on wealth creation.
Case Study: Improving Investment Returns
A study found that investors who make better investments and generate larger returns on investments continue to learn and never stop.
This ongoing learning is considered cumulative and is like compounding interest described by warren buffet. This learning deepens your ability to invest skillfully and make above average returns.
Here are the next action steps you can take.
Step 1: Decide what area of investing you want the checklist for
Step 2: Make a list of items anywhere from 10 to 20 or more if you want so you can observe potential investments with the checklist in mind
Step 3: Decide on the move forward indicator for your checklist (what’s the percentage)
Step 4: Practice simulating and choosing potential investments using the checklist you have created
Analysis
It can be argued that the analysis can be a part of the investment checklist but here it is an extension of the checklist or another perspective on assessing a potential investment.
The checklist is not the full analysis to decide on investing unless you make it for that purpose. The investment checklist was a brief observation to see if an certain investment is worth being investigated into even further.
The analysis is a deeper dive into uncovering the pro and cons and risks of investing in the investment of interest. With so much information and ways to analysis an investment your job is to choose your exact measures.
The exact measures you choose to guide your analysis and investment decision is normally based on your background and the type of investor you are.
If a person is an equity investor interested in individual stock he may value financial indicators such as but not limited to return on shareholder equity, dividends per share, net income, dividend annual yields and all dividends to net profit percentage.
A person interested in investing but is more of a debt investor may value things outside of what an equity investor would value or value to a different degree.
Debt investors may value liquidity in a firm so if firm has good liquidity if they needed to convert assets into cash they could pay their debt in the short term which benefits debt investors if they had their money into debt instruments the firm was using.
If firm had bad liquidity debt investors may be hesitant with debt instruments because if firm had to liquidate to pay short term debt it would be unable to. These are two investors but value certain financial indicators over others based on the type of investor they are.
The main point is to really understand your own personal investment type and what matters most to you. Once you decide that and can express it clearly you can then organize specific measures to gauge your deep analysis of your potential investment. This methodology works with any investment sector.
When you deepen your understanding of deep analysis into choosing investments this yields better investment returns.
With better returns you are able to channel that in anyway you desire like retiring early if you choose to. This article discusses how to build wealth so you can escape your 9 to 5 and be more free.
Here are actionable next steps:
Step 1: Discover your investment type
Step 2: Choose the exact measures you prefer for your deep analysis
Step 3: Simulate and practice using your deep analysis on potential investments
Along with doing a deeper analysis of your investments remember to include risk management in your investment journey. Check out Brian Kehm as he discusses “Why Risk Management is Important in Your Investment Portfolio“.
Conclusion:
Altogether you can boost your investment returns by having a strong purpose for investing, creating and utilizing an investment checklist and doing a deep analysis on the investment of interest. Please leave a comment below on what investments your currently interested in?