02 Dec How to develop a strategic investment plan
When I think about the power of strategic investment, I’m brought back to a memory from my childhood, sitting under a pecan tree. Let me explain. I’m from Houston, Texas. That state has a big personality and is known for a lot of things: cattle, the Dallas Cowboys, great Mexican food, the Alamo, and, for me, pecan trees. As a boy, my friends and I would pick up pecans that had fallen to the ground and place them in burlap sacks. After we had collected 20 pounds, we would take them to the feed store and sell them for so much per pound. As a kid, that was an exciting way to earn extra cash!
It never occurred to me as a child that owning pecan trees would be a good strategy for producing a whole lot more income until I met my wife’s grandparents. They owned a pecan orchard with several different varieties of pecans. At harvest time, large tarps would be placed under the trees, and the trees were shaken until the tarps were covered with pecans.
The same grandparents also grew a large garden every year. They would till the soil annually to make it ready for the planting season. It would take several months for the newly planted seeds to grow into a plant that was healthy enough to produce vegetables. There was a pronounced amount of effort required to plant, weed, and harvest the vegetables, and it had to be done over and over again every year. On the flip side, the pecan orchard didn’t have to be replanted every year. They required way less work and are reproducing abundantly even today.
What does this have to do with you and me? Well, the secret to building wealth is to develop an orchard— not just a garden. A garden looks more like a job, while owning an orchard looks a lot more like passive income: money you earn in a way that requires little to no daily effort to maintain.
Types of Passive Income
We teach that there are six primary categories of passive income. There are more, but this list will help you focus and get started.
+ Rent from real estate
+ Capital distributions from a business
+ Dividends from stock
+ Interest from bonds and CDs
+ Royalties from oil and gas
+ Royalties from songs and books
How to Build a Strategic Investment Plan
At WealthBuilders, we love to help people invest with wisdom. You cannot say yes to everything when it comes to investing or you will get burned. You have to learn to say no to certain things, and when you invest with a strategic formula, you begin to gradually learn what opportunities are good opportunities for you. A great example of a good formula for investing in real estate is the 80% rule. Essentially, your total investment— that includes all of your repair costs and acquisition carrying costs— should be no more than 80 percent of the real value of the property. Then, you want a $300 per month positive cash flow after interest, taxes, insurance, and management. That ensures that you stay out of the red zone and continue to make a respectable passive income.
Strategic investment helps you work smarter, not harder. In other words, it helps you plant orchards instead of gardens. That gives you more time and more capital to invest right back into the Kingdom of God.
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