Taking Stock of The Fools Advice

The Motley Fool provides a wealth of information and tips for stock market investors.  In a recent article, “Stock Market Risk Reduction,” offered some excellent tips for reduce risk in the stock market.  These same tips would easily apply to real estate investors.

1.  Be a long-term investor, not a short-term speculator.  The Fool warns that holding stock for only a short period of time is “not investing – it”s gambling.”  The same is certainly true of real estate. Building wealth in real estate takes time. Even Flippers soon realize that the real value of their business model is doing many deals over a longer period of time, some of which will make more than others. The law of averages will catch up.

2.  Increase your knowledge.  The Fool puts it well:  “The more you know, the fewer mistakes you”ll likely make.” So true!  The Fool cautions against relying on the “tips from friends or strangers.”  Many novice investors jump at prospects based on what they heard from their buddy or a promotional event they attended.  Due diligence is the process of obtaining relevant information in order to reduce the risk of loss. You need to take time to understand the market, the area, and the factors that will impact your investment. Attend a real estate investing association that provides educational programs and training, not sales pitches.  Read books and articles, and topical blogs such as those provided by The Bigger Pockets.

3.  Limit your downside.  The Fool recommends that in investing in stocks, you need to consider the valuation of the company. The same applies to real estate. Learn to assess the true value of real estate that you are considering. Experts often say you make Du kan l?se om dem alle her pa dkonlinecasinos.com online. your money on the purchase, not the sale. Spending too much on a property, compounded by failure to control rehab costs, can quickly wipe out your return and even result in a loss!

4.  Avoid futures, commodities, option, penny stocks, shorting and margin – at least until you”ve learned a lot about them.  Good advice for stock investors! In real estate, there are numerous examples of complicated investment schemes that are extremely risky, and should be avoided until you understand and accept the risk involved. Unfortunately, there are a lot of promoters who make a lot of money selling program packages for the novice real estate investor with promises of quick riches that involve complex schemes that are at best risky, and at worst, might be illegal in some states! Stick to the basics and learn the fundamentals before you venture into the deep end!

Don”t be a Fool – learn before you earn!