Money Mindset

Money Mindset discusses the experiences and opinions of a middle-aged professional on the topic of money, including: financial planners, investment experiences, part-time income sources, real estate investment and private sales, web site income opportunities, changing professions, home office organization, money education for kids, and many other subjects I have experienced first hand or even just thought about.

Thursday, March 02, 2006

It Doesn't Take Money to Make Money

This is a simple statement. However, you might be surprised at how some people interpret this universal "truth".

Many investment gurus will make this statement. Inevitably, they have proven it, using their own success as a testamonial. So, it must be true.

What I have found is that there is usually a way to structure investments so that I end up with an asset, and ultimately, I have no less money in my bank account than I did before I made the investment. This is based on theory, and I do know a few people who are doing this.

By most people's definitions, this kind of investment approach could be called "creative investing".

I have tried several investments using these approaches. In some, I have been able to make an investment, and within a few months, I have a new asset and no less money in my bank account. This doesn't mean I didn't use money to get the asset. It's all in the definition and implications.

Sometimes you can ask people to sell you a house and hold 100% financing, which means you don't need to put any money down up front. Of course there are likely to be land transfer taxes and legal fees. So you can't really say that you don't need "any" money. But it's not impossible.

For me, the key thing is that it is much "easier" for me to make an investment if I have some cash to put into the deal. Then, there are ways to get back the money I put in within some period of time, so I can use it for my next investment.

Someday, I hope to have the skill to partner with people in a way that leverages someone else's money and my skills in putting together investment opportunities. I believe it can be done. But it requires a lot of knowledge about what partners are looking for in an investment. It may not appear complicated, but it is not necessarily easy, depending on your investment knowledge, experience and credibility.

If it was a simple AND easy thing to do, I think most people would at least know someone who is doing it, and eventually most people would be doing it. I don't know very many people who are able to do this. But I'm working on being one.

It doesn't always take cash out of my bank account to invest in an asset that will earn me money, but without the skills to do it right, I think it is much easier if you have the cash.

So, I'd plan on spending a lot of time (and money) developing my ability to invest without taking money out of my bank account.

Let me know what you think by posting a comment below.

... Scott

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