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045: My FAVORITE Kind of Investing!
The Wealthiest Investors in the world have a favorite kind of investment.
Now I’m not talking about a specific asset class necessarily. I’m talking about an investment strategy.
You see, everyone loves high percentage return on investment. But you have to be a little careful here.
If I say I got a deal for you— I will pay you 25 percent per year if you give me a $100K. That sounds great right? Well, what if I only pay you for four years?
Oops! Despite this fantastic “ROI”, all you did is get your money back. That’s not a good investment is it?
Now, on the other hand, what if we bought a property together and you got all your money back in 3-4 years AND continued to cash flow after that?
If all your original cash is back in your pocket, what is the “ROI” on that? Actually there is no number for that…you have none of your original capital in the deal anymore. That is called INFINITE return on investment.
Beats the hell out of the original scenario doesn’t it?
This kind of scenario is sort of the Holy Grail for sophisticated investors. Why? Well, it’s free money right? You keep recycling that original capital into deal after deal and create a cyclone of free money for yourself.
If you think this kind of investing isn’t possible, just look at my friend and Rich Dad Advisor, Ken McElroy. He’s done this his entire career. Why do you think he’s so popular?
Well, Kenny is one of the nicest guys you’ll ever meet but he also makes people a lot of money. Buy apartment buildings, increase their value and refinance the property returning original capital to investors and infinite return on investment. That’s his formula.
And, until the multifamily real estate market recently tightened up so much, this was my preferred way of investing as well. Unfortunately right now the stupid money is out in full force overpaying for everything. In that environment, it’s hard to do this.
BUT…infinite return on investment is not limited to apartment buildings. Let’s take for example cryptocurrency. Say you put in $25K and it became $100K. Why not take the original $25K out and put it somewhere else? Now, if you lose all your crypto money it won’t hurt as much.
You can also do this in various private placements in the junior mining sector. Accredited investors can participate in opportunities where they buy company stock before it hits the market and that also come with “warrants”.
Warrants are just options to buy additional stock at a fixed price. One strategy is just to sell the original stock as soon as possible (preferably at a significant profit) and hold on to the “free” warrants in case the stock takes off—no risk in that either. That’s called “free trading”.
Do this enough times in various markets with various asset classes and you can create a lot of free money for yourself without a significant amount of initial capital investment.
I often talk about the concept of velocity as one of the keys to building financial wealth.
Free trading is Velocity on steroids and that is why it is the favorite investing strategy of the ultra wealthy. You should try it!
Buck
P.S. If you want to see an example of an opportunity with potential infinite return on investment, make sure to watch the replay of last night’s webinar on our most recent accredited investor opportunity! Watch it here: