While there is no single ‘best’ investment, the strategy that is this book’s focus is adaptable. Depending on how the investment is structured, it is possible to achieve a variety of different investment goals – just not all of them at the same time.
When you are looking to invest, it’s vital to understand why you’re investing, and what your motivating goal is. Which of the following goal archetypes best describes your motivation to invest?
Once you know that, you can evaluate investment options in the context of how quickly and efficiently they will achieve that goal.
There are two main ways that an investment can make you money. The first way is to generate an income (passive income). The second way is to grow in value, so it can be resold for a profit (capital gain). Many investments do both, to varying degrees.
For example, an investment property property does both. By renting out the property, you generate passive income via rent. But the value of the property is also changing, creating the possibility of capital gains when you resell the property.
An investor whose goals are focused on maximum long-term profit will tend to invest in owning valuable assets. On the other hand, an investor who wants short-term benefits will likely have a portfolio of investments that generate regular passive income.
Neither is inherently ‘superior’, it just comes down to what your goals are.
So let’s begin by exploring the common types of goals that investors have, and later, we will explain how our strategy can serve these goals.