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Prudent Investing – Plan for Your Goals

Prudence. The word as an old-fashioned ring to it, doesn’t it? Reminds us of prim-faced schoolmarms of another era. But the old-school virtue of prudence, while not the most glamorous, is a linchpin of successful real estate investing. Avoiding needless risks while staying focused on your long-term investing goals is a key part of Jason Hartman’s advice to new and potential investors.

In recent posts, we’ve been exploring Jason’s 10 Commandments for Successful Investing. Commandment number four, “Thou shalt use prudent financial planning techniques,” speaks to the value of looking ahead, consideration of options, and using the advice of qualified investment counselors familiar with the kinds of investments you want to make.

Being prudent doesn’t mean being rigid. Nor does it mean slavishly following someone else’s advice. Prudence goes hand in hand with knowledge to help you reach the financial goals you’ve set for yourself, either independently or in consultation with advisors such as those working with Jason Hartman’s programs.

The first step in prudent financial planning is to establish a plan for your investing career. Whether as simple as a list or as complex as a long-range overview developed with a financial advisor, the plan clarifies your goals for investing. What do you want your investments to do for you and your family? The goal might be to establish some income for retirement, or to achieve complete financial freedom. Or it might be more ambitious, such as creating wealth, not merely an income to supplement a pension. Whatever those goals are for you, it’s important to acknowledge them clearly.

Once you’ve stated those goals for your investing efforts, you’ll need to create a road map for getting there. Remember Commandment Two from this series — “Thou shalt have a professional investment counselor”? One aspect of the goal setting process is taking a realistic look at who you are, what your current financial situation is, and what’s available in the area where you want to invest. Armed with that information, you’ll be ready to find and work with an individual who’s qualified to help you execute your plan.

Prudent planning also involves understanding yourself and your style of dealing with the world in general. Are you risk-averse or risk-tolerant? Do you need instant gratification, or can you accept the long-term commitment involved in profiting from rental real estate? As Jason Hartman points out, some risky investments can yield quick cash but have no staying power for long-term wealth building.

Taking a prudent approach to investing in rental real estate, as Jason Hartman advises, is based on knowledge – of yourself, your goals, and the available options – combined with the help of a professional who can help you make those goals a reality. The prudent investor is an investor in control. (Top image: Flickr/gailf)

The Heroic Investing Team


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