VP of Investor Relations at Boron Capital, a private investment firm serving diverse segments of the population.
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Today, the world is anything but status quo. As people reconfigure their lives and careers in the middle of a global pandemic, they’re more likely to reexamine their financial and investment strategies, too. Some of the most impactful lessons we’ve learned during the Covid-19 crisis is the importance of human connection and continuing education. Knowledge and people are power; they’re your two most vital resources.
Building a successful investment strategy starts with creating a winning environment for everyone involved. You absolutely have to know who you’re doing business with to ensure you and your investors will be incentivized to be in alignment with the end result. Your investing partner is someone who should stick with you during hard times – and ultimately thrive with you in mutual success.
Until now, most people have been conditioned to be dependent on the status quo. They’ve abdicated their wealth to an established system and they’re hoping this system will pay off in the long run. While the traditional 401(k) pension plan was conceived and structured with good intentions, a blessing becomes a curse when we rely on a system to take care of us without taking the reins ourselves.
If the current crisis has you questioning your investment strategies and relationships, here are some guideposts to help you establish the best path forward.
Question the old normal.
The average person places their retirement savings in the hands of their company’s program, without asking where and how that money is being invested as well as what fees they’re paying. This is the old normal. If the old normal is working for you, you should continue. But in order to determine if a plan is working for you, you have to educate yourself on all of your options.
Consider private investments.
Most people don’t know enough about private investment firms because they aren’t marketed to the same extent as public companies. Learning about this sector of the financial world requires independent initiative, as well as the time and careful consideration necessary to weigh each unique investment opportunity on its own merits.
You’re probably accustomed to thinking about investing in the public market, which consists of stocks, bonds and currency. The public market is where most people put their 401(k)s, usually in a mutual fund. The public market is full of middlemen, who extract investment fees, and intangible assets, which are not collateralized and therefore much more susceptible to the public’s emotional appraisal.
In the private market, there are tangible, alternative assets such as artwork, precious metals and real estate. Most of these alternative assets have built wealth for investors for centuries – long before the stock market – and are still building wealth today. Even cryptocurrency, depending on how you invest in it, can be considered a private market investment asset.
Because the private market affords people the opportunity to make two and three dimensional investments, such as investing in a business as well as the real estate it’s operating on, and because private markets aren’t highly susceptible to emotional volatility like public markets, alternative investments can offer greater, compounding cash flow, maximizing an investor’s returns.
Build empowered relationships.
Instead of being publicly-traded, private investments depend on real life exchanges between real people. Private investors need to be fully empowered and confident in their decisions, because this confidence is the springboard for making investments that you can control. By creating your own investment environment, you establish a framework that puts you in the best position to win in that environment. You also establish a position of control, which is an opportunity not typically afforded in the traditional public market investing model.
Having a good relationship with a private investor or investment firm means knowing exactly how that person or firm makes their money, where that money is going and how this aligns with your goals and values. Once you understand someone’s track record and determine you’re in alignment with each other, you have to create a legal structure that incentivizes trust and holds everyone accountable. No matter how well your interests align at the onset of an investment, hard times cause people to fall back into preservation mode, which can slant someone’s decision making.
A true winning environment is a winning environment for everyone involved. In a winning investment model, the whole truly is wealthier than the sum of its parts. When you structure private investment deals and partnerships, always seek to work with people who have a strong history of experience and expertise.
A great investment partner has the heart of a teacher and will steward you toward continuing education. Curiosity is one of the best characteristics an investor can have. Retaining a student’s frame of mind is one of the most prudent things you can do in order to position yourself to build exponential wealth. This requires both humility and devotion.
In uncertain times like today, it’s clear to see how much of the way we do things must be questioned. At a time like this, the status quo seems antiquated, at best – at worst, it could even be dangerous. That is why we must always evaluate our game plan when there is a shift in status quo. Successful investing is a dynamic process. It means actively seeking to understand the world as it evolves, and making a practice of consistently going back to the drawing board with an open, curious mind. No matter where you’re at in life, the right time to take control of your investments is now.
I wish you all the best while you dig into your due diligence and outline what is next for you. Like Buckminster Fuller said, “Don’t fight the forces, use them.”
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