About four years ago, I wrote a post outlining what I believed to be the ten guidelines a Freedom Fighter could follow in order to reach Financial Independence in 10-20 years. Here they are now shared as The Tenacious Ten! That post, paired with this infographic, succinctly distills the principles I’ve personally followed and espoused on this blog over the last five (going on six) years.
Since it’s been over four years since solidifying these, would I change anything?
Yes, there are a few modifications or tweaks I would make.
What I would change
#6 Learn Two Basic Investment Strategies with Options. I still think anyone that actively manages their money and invests in the stock market should understand and be able to use both the short put and covered call option strategies. But I would change this to read “When Evaluating Investments, Focus on Risk Mitigation First.” Over time I’ve learned that the reason I have been so drawn to the short put and covered call strategy is that they align very well with my “risk mitigation first” approach to investing.
These strategies allow me to reduce cost basis, which in turn builds in a “margin of safety” (as Buffett would describe it) to shield my capital from losses. In other words, I believe it is most prudent to focus first on the return of your capital over the return on your capital. This is also why I’m so fond of hard money lending, because when I invest in a loan that is in first position with an LTV of 60%, I know that I’m first in line to be paid back and that the asset would have to fall 40% in value before a single dollar of my capital is at risk.
#8 Invest in Cash Flow Positive Real Estate. I would leave this on the list but add that it can be direct or indirect ownership. I used to believe that it was best to own real estate directly, but over time I have evolved my thinking. Not everyone is cut out for managing properties. My wife and I have come to appreciate investments that are more passive in nature (which fits our very busy lives).
#11 Acquire Equity in a Business. This would be a completely new principle that I would add. I honestly don’t know how I missed this the first time around. But this acts as a real wealth accelerator whether it is equity in your own business or someone else’s. Even better if you can do both!
(Please excuse any typos you find in the below infographic as it was created before I had an editor and I don’t have the ability to edit it now.)
Good post Dom!
Passive real estate investments (REITs in my case) make more sense for my stage of life too. I love your focus on increasing income by always striving to learn and provide more value.
Keep it up!