Gain experience through action
By Kim Kiyosaki
If you are the type of person who wants all the information before making even a relatively small decision like me — from comparing labels at the grocery store so I can choose the spaghetti sauce with the fewest unpronounceable ingredients to reading reviews about a movie so I can decide if it’s worth seeing.
So you can probably imagine the great deal of care I take when making a decision on something large, like real estate. I meticulously find out everything I can about the property and crunch the numbers to see how feasible it will be to create cash flow from it. Does that mean I have special powers? Or that I was just born with a knack for investing? No, it means I took the time to educate myself. And you should too.
Becoming a Know-it-All There are few things more risky than an investor who has no idea what she is doing. The reality is that any woman can acquire knowledge and sift through the information available to find out what she needs to know. So, where do you begin?
1. Learn the lingo. Understanding the definitions of financial words will greatly increase your knowledge of the subject. Start with terms like assets, liabilities, ROI, and gross vs. net income. Then, dig deeper. Every time a new word comes up in conversation or in your readings (which I’ll discuss in a minute), stop and look up the definition instead of glossing over it. 2. Figure out the numbers. Learn how to read financial statements, such as income statements and balance sheets. If you intend to reach your financial dreams, then you’ve got to become very comfortable with basic addition, subtraction, multiplication and division. Consider every investment you are pursuing as a mystery to be solved and numbers are the clues that guide you. 3. Read and listen. There are countless books, blogs and podcasts on the subject of real estate investing, many geared toward beginners.
4. Find a mentor. Seek out a seasoned real estate investor and pick their brain. Behind every successful investor is a person who likely made some costly mistakes early on—see if you can find out more about where they went wrong and not just their successes. 5. Attend workshops. Free seminars can kick-start your path to educated investing and taking control of your financial future.
6. Question everything. It’s one thing to seek advice from a trusted source, like a business partner or financial adviser, but it’s another thing entirely to take everything you hear as gospel. You must think for yourself, so that you’re making the most informed decisions possible. Try asking these questions when presented with advice or opportunities: Does this make sense for me? What are the pros and cons? Will this get me closer to my financial goal?
7. Ongoing education. Learning is a lifelong pursuit because things change. Laws, regulations, and terminology adapt over the years, so keeping current is an investment in your future. Investors who allow themselves to become stale will no doubt face numerous risks: losing momentum, legal ramifications, etc.
8. Gain Experience. At some point, you have to decide you’ve learned enough to pull the trigger and make your first investment. Hopefully you will have gained enough knowledge to avoid some of the most common pitfalls. But you’ll likely make some mistakes and experience a few setbacks along the way. What’s important is that you learn from those situations and apply that to your next investment. You’ll get wiser with each go-round. I sure did.
But if you let that fear paralyze you and keep you from moving forward, you’ll miss out on reaping the rewards of your newfound education.