I’m finally to a point in my personal finance journey where determining my preferred vehicle for my investments is here.
I’ve made a ton of progress on my personal finance journey to the tune of growing my net worth by 400k in 9 years. Here at EAT Money I am a huge proponent of tracking your expenses and focusing on growing your 9-5 income.
I’ve done my best to practice what I preach. If doing both of those items correctly you’ll end up with a pretty good savings rate. I’m finally to that point where I’ve got to figure out what to do with my savings.
Sure I invest in retirement but now need to decide what I’m going to do with whats left in my savings account.
This is hugely personal decision based on what your risk tolerance is, what your are and what kind of future you want to build for yourself.
Finding my ideal investing options
There are several options when it comes to investments. In fact there seem to be several popping up every day. Today you could probably go out and invest in everything from wholesale real estate to wine to baseball cards.
I’m to the point in my personal finance journey where earning more and saving money is great, but its not going to move the needle to where I want to go.
I see focusing on limiting your expenses as step number one and growing your income as step two on the way to financial freedom. Those are both steps that will grow your net worth incrementally over time.
Where the exponential growth (from compounding) occurs is when you begin investing your money and letting it work from you. Figuring out the best type of investments for me is a journey I’ve been on.
I’ve previously laid out my life plan which included some of the different asset classes I wanted to invest in. None of them were to far out there as I don’t see a need to venture too far out from previously proven paths.
What about the stock market?
The stock market has always been the go to answer for me. Its 100% hands off and there isn’t any thinking to do at this stage in my life. It has treated me well thus far and don’t really have any reason to complain. I’m a firm believer in what Jim Collins teaches with his stock series.
Some realizations lately have led me down the path of evaluating other options. The first is that the stock market seems to just keep going up and up and up. Certainly thats a good thing but its July of 2020 and we’re in the midst of a global pandemic.
It just get an uneasy feeling when the stock market doesn’t seem to be acting rationally. I’ll be the first to admit that I’m not expert but makes me a bit uneasy.
Don’t get me wrong I still have my entire retirement portfolio plus some other money in index funds. However, those are all long term funds with long term time horizons and think its the best spot for the money.
All of this leads me to where I’m currently interested and putting my money where my mouth is.
The benefits of real estate investing
If you look at my plan from a couple years ago real estate made the list. Its always been something I’ve been interested in but never had the guts to pull the trigger. Well some life circumstances gave me the golden opportunity on a silver platter so I took it.
I foresee several benefits to real estate investing. The first is that it has allowed me to scratch my entrepreneurial itch. Through this process I’ve gained the experience of forming an LLC as well as working with lawyers and bankers.
While this certainly isn’t my main reason for doing this it has been an unexpected benefit.
Another big benefit of real estate investing is that it allows for diversification from the stock market. I’m a big fan of diversification, maybe too a fault, and believe that real estate just gives me enough horse to ride.
Being a type A personality real estate offers another big advantage, control. By investing by myself it gives me complete latitude to do what I want, when I want. While some may not like that, I relish in it.
I want to be the person making the decisions and writing the checks.
Ultimately its your call
What to invest in and how to invest are very personal decisions. I would push you to make your own decisions and not let anyone else sway you.
The combination of index funds and rental properties is a path that many have followed but that doesn’t mean its the path for you.
Good luck on your journey!