My last described the investing process in three simple steps with a brief summary of each steps.  These formed a simple framework for successful investing using a real estate flip as an example.

Step 1 – Selecting the investment

There are numerous types of investments and as many if not more styles (i.e., how you select and maintain your investment.). There is no rule that you need to pick one style and follow it exclusively.

You can keep multiple portfolios each managed with a different style, or mix and match styles in one portfolio, keep to a single style or all of the above.

Most importantly, don’t fall into an approach accidently or by default.  Consciously map your investing style to most likely match your objective.

That is where the selection process starts.  State your objectives.  Making lots of money with zero risk of loss is a great objective, unfortunately it is not realistic nor is it specific.

A better example of a realistic (but agressive) objective would be; a net annual return of 15% averaged over 5 years with losses in a single year never exceeding 5%.

Picking  a Style

The goal is a risk averse approach to achieving an agressive return (in the context of a low interest rate environment). This type of clear and readily measurable objective can guide both your style and types of investment to select.

I will pick this up tommorow, exploring style and investment options together with how they can map to your goals.