In Gary Keller’s life-changing book, The One Thing, he brings into focus the importance of focusing on “the one thing.” Hence the catchy title.
Although similar to Curly’s advice in City Slickers, Keller’s advice is a little more practical.
Keller says “the one thing” is whatever you can do that makes everything else you need to do either easier or unnecessary.
Yes, it’s about leverage … doing one thing that advances many others. Of course, real estate investors LOVE leverage, at least of the financial kind.
FINANCIAL leverage lets you control bigger assets, more income, and more tax breaks … all for less cash. Stock traders use margin and options to do it.
But Keller is talking about ACTIVITY leverage. It’s the quintessential “Work Smarter, Not Harder” … with an important twist.
Working “smarter” is often conflated with being efficient … doing something quickly, easily and inexpensively. This is different than doing what matters.
It’s not just about production, but PRIORITIES.
You could say, “Work WISER, Not Smarter.”
When you combine leverage with priorities, you magnify effectiveness.
The earlier you figure this out, the more it compounds over time.
And it’s not just money. Money is merely a means, not a mission; and values are highly personal.
So although all the current economic and political drama is fascinating … we’re guessing “this too shall pass.”
So we’re taking a break from all the hoopla to simply think about how to “Invest Wiser, Not Smarter.”
The late great Jim Rohn said success starts with your philosophy …
Your philosophy determines what you value, how you think and believe, what you do, and ultimately, the results you produce.
It’s the ONE thing which impacts EVERYTHING else. Pretty important.
Here are some practical investing examples to ponder …
Those who think “buy low, sell high” is the best way to invest will behave differently than those who believe passive income is real wealth.
Someone who thinks paper currency is a store of value will attempt to collect it … versus considering paper currency as merely a tool to collect real things.
Someone who believes net worth (assets minus liabilities) is the primary measure of wealth will build and value their balance sheet very differently than someone who prefers to discount cash flows to measure wealth.
An investor who thinks the property is the asset will use financing and rents differently than an investor who sees the property as simply a vehicle to collect debt, cash flows, and depreciation schedules.
We could go on and on.
Of course, we each have our own individual investment philosophies. Most are developed through often stressful and expensive trial and error.
And while there’s no one-size-fits-all “best”, there is a right or wrong … for YOU.
Which takes us back to Keller’s ONE THING …
If developing your philosophy is the one thing you do that’s foundational to everything you work, invest, and strive for …
… what’s the ONE thing you can do to develop a powerful personal philosophy?
Reading? Thinking? Journaling? Taking a course? Listening to smart people? Making mistakes?
Sure. All those things and more.
But we’ll argue the SINGLE most important thing is to ASK GREAT QUESTIONS of the RIGHT PEOPLE and LISTEN CAREFULLY to the answers.
SEEMS easy, right?
Not so fast. HOW do you ask great questions? And WHO do you ask?
Great questions! (See? You’re already on your way!)
Our rule of thumb for WHO to ask is … people qualified to have an opinion through their knowledge, experience, research, and achievement.
But the MOST qualified person to interview for help with your personal philosophy is the easiest to skip.
Sounds weird, we know. But just like you probably drive right by great deals in your own backyard every day, familiarity can breed blindness.
Most people don’t know themselves as well as they should. And you’re probably more complex than you realize.
That’s why counselors and therapists have jobs … to help people root out what’s deep inside and get it out in the open so rationality can be applied.
And we’re not just talking about emotional things like relationships and addictions. This applies to logical things like business and investing too.
In fact, emotions are well known to impact financial thinking.
This Psychology Today article says …
“The impediment for making financial decisions is not cognitive but emotional. At the center of this emotional obstacle lies regret and the fear of regret.”
“A full corpus of research papers in psychology and behavioral economics documents the phenomenon. People are often reluctant to take decisions if they expect that they might regret them.”
That’s a long way of saying … people (and investors are people too) are afraid to make a mistake. This philosophy drives their behavior … resulting in paralysis, procrastination, and missed opportunities.
If you’re a syndicator, your investors may be among those afraid to decide.
But whether you’re investing with others or on your own, developing a clear, compelling, actionable investment philosophy is important.
It starts with YOU and what you want, what you’re willing to do, and what you’re NOT willing to do. Some regrets aren’t of results, but of conscience.
It’s been asked, “What shall it profit a man to gain the whole world, but lose his own soul?” Or health, family, self-respect, reputation, etc.
It’s shocking what some people will do in pursuit of fortune, fame or power.
The point is that your philosophy is the foundation of your offense …
… and your philosophy is also your first line of defense against temptations, distractions, including deals, relationships, or risks that don’t make sense for YOU.
If you’re not sure how to “get in touch with your inner investor,” …
Regardless of how you get your personal mission, vision, values, purpose, and goals …
… once you have them, they provide the primary target and guiding principles for your INVESTING philosophy, strategy, and tactics.
So Step 1 is learn YOU. And it’s a big and very important step.
Step 2 is equally big and important … and requires input from smart people including advisors, mentors, mastermind peers, and strategists.
That’s why we attend conferences and talk to as many smart people as we can.
Of course, we always try to do it on mic, on camera or on stage as often as possible … so we can share with you.
Here’s a REALLY important tip …
… when you look at portfolio management like a CEO, your role isn’t to know everything about everything. It’s too much.
Instead, your responsibility is to know a little about a lot so you can ask great questions of experts … and understand their answers.
Then the real trick is to process all the information and make wise decisions.
And since you’ve stuck with us all the way to the end, here’s an important caveat …
Most conventional investing information and opinions are rooted in philosophies that drive behaviors and funnel money into a financial system that is arguably corrupt, opaque, and rife with risks most participants don’t understand.
We’re here to offer alternative views and options.
Meanwhile, coming full circle …
Of the MANY things you might work on to advance your development as an investor and build a resilient and prosperous portfolio …
… establishing a strong personal and investing philosophy and resulting strategies is a great investment of time and resources.
So as you look forward to the new year, we encourage you to make this a top priority.
Until next time … good investing!