If you want people to read your investing-related post or book, you’ll increase your chances by mentioning Warren Buffett in your title. After all, I just did it — and it might be why you chose to read this. Every financial media company does it, including us at The Motley Fool.
His investing skills while the chairman and CEO of Berkshire Hathaway have made him the fourth-richest man in the world. Most of the articles and books about him attempt to dissect his investing strategies and explain how you can use them to identify your own winning stocks. So it was a bit surprising when Larry Swedroe wrote Think, Act, and Invest Like Warren Buffett. He’s the director of research for the BAM Alliance of independent financial advisers, the author of several books, and a blogger on CBS Marketwatch. He also thinks that picking individual stocks — as opposed to investing in index funds — is a really bad idea.
I’ve chatted several times with Larry over the years, because he’s as smart as they come on the topics of asset allocation and financial planning. Recently, we had a conversation about why he would write a book singing the praises of the world’s most famous stock picker. Of course, that whole “increase sales by including Buffett in your headline” thing probably had something to do with it. But it’s not just a gimmick; Larry has three main arguments for why the index investor should still listen to the Oracle of Omaha, and he uses actual quotes from Buffett to back them up. And it starts with…
1. Warren Buffett recommends index funds
It may not be widely known, but Buffett is actually a fan of index funds. Here’s what he wrote in his 1996 annual letter:
“Most investors, both institutional and individual, will find that the best way to own common stocks is through an index fund that charges minimal fees. Those following this path are sure to beat the net results (after fees and expense) delivered by the great majority of investment professionals. Seriously, costs matter.”
Buffett’s a smart fellow, and he knows his history and his statistics; both establish that it’s pretty darn hard (though not impossible) to outperform an index fund over the long term. Obviously, he doesn’t think this applies to him — he still keeps picking individual stocks (or buying companies outright). But he recognizes the great value of the index fund. The same goes for us at The Motley Fool. My colleagues devote a great deal of time and energy to finding great stocks. But we also have a room named after John Bogle, the founder of the Vanguard family of mutual funds and one of the primary progenitors of the index fund. (Next to the entrance to our Bogle room, we have a picture of Mr. Bogle wearing a Motley Fool cap during one of his visits to our office. It’s pretty cool.)
2. Warren Buffett ignores market forecasts
Wade into the waters of the ever-flowing financial media, and you’ll see an endless flotilla of gurus offering their assessments of where the market is headed. Buffett thinks you should pay them no heed:
“We have long felt that the only value of stock forecasters is to make fortune-tellers look good. Even now, Charlie [Munger, vice chairman of Berkshire Hathaway] and I continue to believe that short-term market forecasts are poison and should be kept locked up in a safe place, away from children and also from grown-ups who behave in the market like children.”
In case you need some stats to back that up, CXO Advisory Group analyzed the predictions of 68 “experts” from 2005 to 2012. As a group, they were right less than half the time. You would have been better off flipping a coin than listening to these people.
During our most recent discussion, I asked Larry Swedroe why these people still have jobs. He had a few reasons, but one in particular stood out: “I have come to the conclusion, after my long years of experience both as an adviser to some of the largest corporations in the world on managing financial risk and as adviser to individuals and endowments, that there’s an all-too-human need for us to believe that there’s somebody out there who can protect us from bad things.” I think he’s on to something. Unfortunately, market predictions just create — rather than offer protection from — bad things.
3. Warren Buffett doesn’t try to time the market
You won’t see Berkshire Hathaway buying and selling its stocks or businesses too often. Once a company joins the Berkshire family, it’ll likely be in there for quite a while — decades probably. Here’s what Buffett said about it:
“Our stay-put behavior reflects our view that the stock market serves as a relocation center at which money is moved from the active to the patient.”
My very first post on Get Rich Slowly was about attending the 2009 Berkshire Hathaway annual meeting. It happened in May, just two months after the stock market hit bottom after dropping more than 50 percent. It was a dang scary time.
During that annual meeting — and at just about every annual meeting over the past several years — the topic of Buffett’s and Munger’s successors came up. After all, Buffett is 82 and Munger is 89. They didn’t name names, but they have some people in mind. However, it won’t be someone who tries to move in and out of the stock market. Here’s what they said:
Munger: I don’t think we’d want an investment manager who would want to go to cash based on macro factors. We think it’s impossible.
Buffett: In fact, we’d leave out someone who thought he could do that.
The important three questions
The main argument that Larry makes in his latest books is this: If you agree that Buffett is one of the greatest investors of all time, then take his advice. And the next time you’re inclined to act according to some expert’s forecast market forecast, Larry has three questions you should ask yourself:
Is Warren Buffett acting on this expert’s opinion?
If he isn’t, should I be doing so?
What do I know about the value of this forecast that Buffett and the market in general doesn’t?
As Larry told me, “If someone has already told you that they think Buffett’s the greatest investor, it’s hard for them to say that they should do the opposite of what he’s advising them.”
Inside: Trade and Travel is a legitimate investing course to learn how to make money in the stock market. See my personal view as a student.
I have been in the personal finance industry for a long time and have watched gurus with CFP and many more designations struggle to make money consistently in the stock market.
There are many concepts on how to trade the stock market.
Teri’s IWT system works.
It’s legit.
I’m a part of her investing course. I have seen the results. $1000 a day club in my LIVE account. Yes.
So, you get to read my Invest with Teri review first.
Teri is able to break down investing into the stock market like no one else I have seen.
You can read a book or blog and find many different concepts that work for them. Then, walk away with your head spinning and quit on the idea of trading and lose a bunch of money along the way. This is why most people leave it to professionals (which is a mistake with that pesky 1% asset management fee).
The Invest with Teri Method is a 7 Step Process that simplifies how to invest in the stock market.
She goes into detail on each of the seven steps to make sure you pick the right companies, limit your risk, know when to buy, and when to take profit.
Plus you have access to a private Facebook group and countless hours of coaching calls to really understand the IWT method.
This is how I am choosing to finance the life I want.
Okay, now that we got that out of the way… let’s dig into the details of the Invest with Teri review and learn how to travel and travel.
This is what you want? Right?
Make more money and have more time freedom.
Enough sitting on the sidelines… read this IWT review and then sign up today.
Honestly, if you have any money in the stock market, you need to take this course to understand the fundamentals.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
What Are Online Stock Trading Classes?
If you’re interested in taking stock trading classes, there are a few things to consider before jumping into the world of investing. Stock trading is an investment that can be profitable if done correctly and is a way to grow your money.
Stock trading courses are a great way for newcomers to learn about the stock market. Also, courses are fantastic for those who want to refine their investing skills or maybe stop the bleed of money from trying on their own.
The Invest with Teri Ijeoma course provides a more structured learning path and can help you avoid some of the common mistakes made by novice traders.
In order to get the most out of a stock trading course, it is important to find one that matches your individual needs and goals. Plus one that can offer support and guidance because learning to trade is a learning curve.
Who Should Take Stock Trading Classes?
It is possible to learn the ins and outs of stock trading on your own without taking any classes.
However, for those who want a more structured learning experience, or for those who want to have access to a community of traders, stock trading classes can be a great option.
Taking stock trading classes can be a great idea for people who are interested in getting into the industry. The stock market is one of the most popular industries to get involved with, so it is likely that you’ll want to pursue a side hustle that may lead to a career in this field.
There are many different types of stock trading classes available, so it is important to do your research and find the one that best suits your needs.
Even if you are an index fund investor doing it on your own, this investing class is great knowledge to understand how the market works beyond “I hope it keeps going up.”
Must Read: How To Invest In Stocks For Beginners: Investing Made Easy
Trade and Travel 2.0
Right now, Teri and the rest of her coaches are doing a MAJOR overhaul on the signature course.
Her design team is currently working really hard to create an updated look and feel so you can experience Trade and Travel even better than before.
However, there will be changes – some we know about and some we don’t.
What we Know Today:
A significant Price increase happened (like double to $10k)
Shorting and gaps will be included in the main Trade and Travel course.
Limited time support on coaching calls. (However, a subscription model for additional coaching will be available.)
What You’ll Learn in the Trade and Travel 1.0 Course
The Trade and Travel course is an online course that will teach you everything you need to know about the world of trading, and more!
First of all, Invest with Teri along with Trade and Travel are used interchangeably. They are both the same AMAZING course that will teach you to make money in the stock market.
You will learn the Teri Ijeoma trading strategy.
The Invest with Teri 1.0 course is divided into two sections:
Travel & Travel – This is the basic course to understand fundamentals and to learn how to make money as the stock market goes up.
VIP Program – This is an advanced course that covers shorting, gaps, and options.
The great news… you can start with the basic Trade & Travel program and upgrade to VIP at a later date.
If any of this sounds foreign to you, Teri is one of the best teachers I have ever met. She breaks break down investing in the stock market like no one else I have seen. She is able to take difficult concepts and make them easy.
Simply put, Teri offers a course that teaches you everything you need to know about investing.
Later, in this Invest with Teri review, I will detail the difference between the two courses and what you will learn.
Teri’s Purpose of Trade and Travel – Financial Independence
The purpose of the course is to help students learn how to generate wealth.
Students can use the extra income earned from the course to supplement their income, pay off debt, or save so they can solidify their financial independence.
There is no doubt that in order to achieve financial independence, you need to invest in yourself. This means learning new skills, working on your mindset, and making smart choices with your money.
With a positive attitude and a determined spirit, anything is possible!
Want to Learn More about Investing?
How do you trade with Teri?
The privilege to have one-on-one coaching with Teri herself is very rare. However, she is known to offer group mastermind sessions for her VIP students.
So, in order to trade with Teri, you must enroll in the full $5000 course and wait for the next opportunity to trade with her.
Trade And Travel Program
The Trade and Travel program is the fundamental part of the investing course. This section will teach you the basics of the stock market and how to make money on the way up.
Teri’s trading strategies focus on risk management and she has seen many of her students achieve success with trading.
To be upfront in this Trade and Travel review, you will learn:
Learn how to pick stocks
Understand how the stock market works and how you can make money off it
Recognize why risk management is the most important aspect of trading
Understanding how to read charts
Learn the best places to buy and sell a stock could be
Be able to tell the story of the candles
Understand if your stock trade has a strong likelihood of being profitable
Determine how many stocks to buy based on your risk tolerance
How to place a trade at your brokerage
Manage your trade and exit based on your trading plan
That is a highlight of what you will learn in the basic Trade and Travel program.
Trade And Travel VIP Investor Program
The VIP program is the advanced piece of the course once you learn the fundamentals of the Trade and Travel program.
For those looking to upgrade to the VIP program, you will learn:
Make money when the market goes down.
How does shorting the stock work
When to look for gaps and what they mean
What is globex?
Options! This is everyone’s favorite part of the course!
Understand how to make money with option contracts
Risk management with options
Plus so much more!
Plus you can rewatch all of the curriculum and coaching calls over and over until you get it. That aha moment!
Both Travel & Travel and VIP offer live zoom training each week. Plus there is a vault of recording coaching calls to review.
Supportive Trading Community
Teri has built a supportive trading community of fellow students who have gone through the course.
Each trade cuzzin offers encouragement, advice, moral support, and feedback to each other.
This supportive community can help people overcome their anxiety and doubts when trading and investing.
You can find this supportive community on Facebook groups, Telegram groups, Clubhouse clubs, local meetups in your city, and people have connected to create a mastermind group. Honestly, there are plenty of people available to make sure you are successful on your journey.
Don’t forget… There are weekly live calls and chart parties.
This is how many people have turned 10k into 100k.
My Personal Trade and Travel Reviews
This is one of the best educations I have received.
My biggest regret is that I did not enroll in the course sooner (same as the time before I upgraded to VIP).
In all honesty, this course is a better education than spending hundreds of thousands on a college degree.
Personally, I meet Teri during FINCON, a huge conference for personal finance content creators and brands.
I loved how Teri spoke during her presentation and quickly reached out to learn more about her Invest with Teri course. Also, I was intrigued by the $1000 in a day club.
As always, I investigate every single company or platform that I recommend.
Obviously, this course has an eye-shocking price tag when you first see it. However, once you start earning your money back, you quickly realize how undervalued her course is.
As I always tell my readers… if I wouldn’t put my time, energy, or money on the line, then I am not going to tell you about it. I will only recommend products, services, and courses only that I truly know that work.
My View as a Trade and Travel Student
After a few months of debate if I could afford to spend the money on this investment course…
I became a Trade and Travel student in February 2021.
As outlined above, the course is jam-packed with information. I thought with my background in personal finance I would have a leg up over the others. However, I quickly learned that I need to view the stock market from Teri’s point of view and put blinders on to others’ opinions or styles of trading.
There are a ton of ways to make money in the stock market. This is one of them.
You can google and probably find many more investment courses and rabbit holes to follow. Investing is one of the most popular Reddit Personal finance topics. People want to learn to trade and most are looking to be fed information.
You have heard that saying, “teach a man to fish and he will never go hungry.”
The same holds true for completing this course, “Teach a trader to make money and you will be more profitable than your dreams.”
The best thing about life is you get to decide what you want to do, spend your time, and budget your money. Investing in this course is a big pill to swallow and I get it. However, I would not be so adamant about telling others about this course since I see a path for people to stop the stress with money.
I am successful with trading. Now, it is your turn to become successful.
This is by far the best investing course I have ever seen. 1000% recommended by me personally.
$1,000 In A Day Club
Here is proof. I made the $1k club in my live account and $10K in SIM.
I am a part of the trading community.
What exactly is the $1000 in a day club?
This exclusive club is for those traders who have made over $1k in a day.
Many IWT traders have received this plaque and part of this $1000 in a day club.
If you want to invest money and make $1000 a day this is how to start.
This is how I am choosing to finance the life I want.
Get one step closer to reaching your dreams and financing your life!
How Long Does It Take to Learn to Trade Stocks?
The time it takes to learn how to trade stocks depends on your personal learning style.
It typically takes 2 to 3 years to learn how to trade stocks.
By taking an in-depth course, you can shorten your learning curve.
Teri’s Approach to Learning to Trade Stocks
More importantly, the results you see trading stocks will depend on the effort put in to learn the curriculum, manage the trade, minimize your risk, and prepare your mindset.
Teri’s goal for her student is to earn 1% of our capital consistently.
This is not a get-rich-quick scheme. You have to put in the hard work to reap the benefits (aka profit).
For example, some people learn better by reading and others prefer watching videos. Some people may find that they learn best by following an instructor in a live trading room.
Who is Teri Ijeoma?
How many years of trading experience does Teri have?
Teri Ijeoma has over 10 years of trading experience.
Once she left her job as an elementary school assistant principal, she took off to travel the world. Those around her started asking questions and she taught her first group of students in Thailand.
Teri enjoys enlightening people on investing strategies and is passionate about building wealth.
Combining her trading experience with her teacher background, Teri is a talented educator in the investing world.
Teri has been featured on Forbes, NBC, CBS, ABC, Black Enterprise, Yahoo Finance, Business Insider, Fox News, Comcast – just to name a few!
She thrives by teaching others how to invest, so they can afford the life of their dreams.
Teri has made significant amounts of money through trading and is motivated by helping others achieve success.
Check out Teri discussing her $1,000,000 in a day profit. Yes, one million dollars in a day!
I’m scared to lose my real money trading. Can I still take the course?
Don’t want to risk your money, but are curious?
You can practice in a simulated account before you move to real money. Then, you can make mistakes. Learn from those mistakes. Understand how the stock market moves. Make wins.
The bottom line you can make real money in the stock market. You just have to be armed with knowledge and a trading system that works.
That is why most people lose money in the stock market! They don’t understand how the stock market works. They have poor risk management strategies and tend to select the wrong companies to trade with.
In the Trade and Travel course, you will walk away with so much investment knowledge and support from other people in the course to be successful.
Afraid to trade individual stocks? Teri’s process works with ETFs too!
Is Invest with Teri Reviews Reddit? Is this a scam?
As with any popular r/personalfinance thread, this is one that comes up often…is Invest with Teri legit?
There is a lot of mixed information on the web when it comes to Invest with Teri.
Some people have had great experiences and made a lot of money, while others have had negative experiences and lost money.
Since I have been forthcoming that I am a student of her course, I would recommend active trading as a way to supplement your income.
However, you must be willing to put in the time and effort to see the results.
And honestly, that is where most people give up because you must put in the effort.
At Invest With Teri, they believe anyone can learn how to invest and generate income through investment. They offer a variety of courses on how to invest, as well as a community of support to help you get started.
Their program has helped people from all backgrounds achieve their financial goals.
Did this Trade and Travel Review Convince You?
Teri Ijeoma is a millionaire trader and coach who shares her tips and tricks for success.
Trading is a skill that can be learned, and with the right education, anyone can do it successfully.
Trading is not a get-rich-quick scheme – it takes time and effort to learn.
Don’t waste your time or money on being a self-taught trader. Take a course from an expert.
I am part of this trading community and so excited to be a trade cuz!
Start building another income stream for yourself.
Invest with Teri Ijeoma teaches you how to make a lot more money than you currently are. Very possibly, trading can help you replace your current income or even exceed it
To be successful, you need to invest in this investing course, develop a solid trading plan and stick to it.
Get one step closer to reaching your dreams and financing your life!
Be the first to know when Teri releases a coupon code for her Invest with Teri course.
Do you have an Invest with Teri Coupon?
It is VERY rare that Teri puts out a coupon code.
However, if she does, I always notify my email list who have been on the fence about enrolling.
Typically, these coupon codes are valid for a limited time only.
Trade and Travel FAQs
Obviously, you are doing your due diligence before enrolling in this course, which I completely understand. I did too! I spent a lot of time researching prior to enrolling in this course.
Here are answers to the most asked questions about Invest with Teri, Trade and Travel, VIP program, as well as Teri Ijeoma.
Is the Trade and Travel course for new investors?
Yes, the Trade and Travel course is for both new investors and experienced investors.
Honestly, you are more likely to lose money in the stock market by trading on your own rather than spending money on the best investing course available.
The course is designed for everyone, regardless of experience level.
There are different courses available within the program for more advanced students (like shorting and options).
How long does the program take to complete?
You can complete the course within a weekend if you binged watch everything.
However, it takes 8 weeks to thoroughly go through the curriculum.
The main Trade and Travel course is broken down into sections, and modules include videos, tutorials, pdf worksheets, quizzes, and more.
The course instructor, Teri Ijeoma, estimates that it will take 8 weeks to complete the online course material before you begin trading.
In addition, there are plenty of coaching calls, which are filled with gems of information that you can watch.
This investing course is much like obtaining a college degree. The more you study, the better results you will have.
What will I learn in Invest with Teri course?
You will learn how to trade stocks and options based on her Invest with Teri method.
This is a solid, effective investing strategy.
Learning how to effectively trade stocks and make 1% consistently is the goal. This is higher than the market returns on any given day.
How much does Teri ijeoma course cost?
The cost of the Trade and Travel 2.0 course is $10000.
In addition, there is a payment plan available that allows you to pay in installments which is a great option without interest or hidden fees.
Honestly, this investing course is undervalued given the amount of knowledge you will gain.
Is there a payment plan?
Yes, there is a payment plan.
This is a great way to invest in the program with an affordable payment plan based on what you can pay today.
Right now, you can start the course with Payment Plans as LOW as $208/Month.
Can I purchase the Trade and Travel course and upgrade to the VIP program later?
Yes, you can always upgrade to VIP and pay the $2,500 difference. This is something you can do at any time.
I purchased the course to learn the basics and when I made money to pay for the VIP course I upgraded. Many students have done the same.
My gem of advice… eventually, you need to upgrade to VIP to fully understand the chart analysis as well as make money on the way down.
How much money do I need to start trading?
Many students start with $500.
This question is very difficult to answer because it depends on your personal finance situation and the type of trading you want to do.
The best advice is to start small and grow your account.
Trading stocks and options come with risk as such you must recognize that it is possible to lose all of your trading money.
Personally, I recommend starting with the amount you are comfortable losing. For me, I started with $3000.
Again, you do not need a lot of money to start trading. Check out this interview with Chris Calvin (aka Trade with Coach). He started with $500 and quickly grew it to 5 figures!
What trading platform does Teri Ijeoma use?
In her Trade and Travel course, she reveals which brokerages she has used in the past.
Right now, she is known to use Tradestation.
Recently, in her 5 Day Take the Trade Live Challenge, she set up a brokerage account with TD Ameritrade.
Do I have to attend coaching calls live?
You don’t have to attend coaching calls live. Also, all of the live trainings are recorded except the weekly Trade and Travel Q&A.
By attending a live coaching call, you have the opportunity to ask questions and get help from the instructor.
You can access the class recordings at your convenience once the coaching call is uploaded.
Personally, I attend the VIP coaching calls live to get the best out of the experience.
Remember, if you miss a class, you can always watch the recording later. You will have lifetime access to the coaching call recordings.
How long do you have access to the curriculum?
LIFETIME ACCESS!
You will have lifetime access to the curriculum.
That is pretty amazing to have these resources available forever.
You can review the curriculum as many times as you like.
Personally, I have gone back and reviewed many modules and coaching calls again (and again).
Is there a Facebook group? How long do you have access?
In fact, there are two Facebook groups for students that are run by the IWT coaching staff.
One Facebook group focuses on the general IWT method and the other is specific to VIP strategies.
In addition, there is a Trade and Travel sponsored Telegram group.
These Facebook groups are a great way to connect with other students and to learn from each other.
You have access to the group for as long as you are enrolled in the course.
What’s Teri’s Instagram handle?
First of all, there are so many fake accounts for Teri Ijeoma, Invest with Teri and the Trade and Travel Course.
Teri’s real account is @teriijeoma
Beware of imposters accounts and scams.
Can I share my course log-in information with others?
No, this is not allowed.
Each person should purchase the course separately.
The only exception is you can share with your spouse.
What is the refund policy?
According to their policy, refunds are not available for any of their courses. (You can read that here).
However, they do not want unhappy students or I don’t want unhappy trading cuz.
So, if you need additional assistance, reach out to their support team at [email protected] and one of the fabulous coaches will assist you.
Honestly, this makes 100% sense as a student. There is so much knowledge and information in the course that it is not surprising.
If you truly put in the time and effort, you will see success. You have to put in the work though.
Just a reminder… trading is a risky investment if you don’t know what you are doing. You can lose money in the stock market.
Know someone else that needs this, too? Then, please share!!
Coattail investing, also known as copycat investing, is one of many popular investment strategies and one that involves investors trying to replicate the results of investors that already have a proven track record of success. In effect, investors look at what other successful investors are doing, and replicate it.
For newer investors, this method has some obvious advantages, and can help ease the learning curve a bit. But, of course, there are both benefits and drawbacks, and it’s helpful to know who you can or perhaps should try to replicate before choosing some coattails to ride at random.
How To Be a Coattail Investor
For the most part, coattail investing incorporates a buy and hold strategy, where an investor buys stocks and holds them for the long term — a period of several years or several decades. Publicly available information from the financial press and the Securities Exchange Commission (SEC) website can give copycat investors information on how investors (those managing more than $100 million) have invested their money.
Coattail investing begins with choosing what person or group to watch. Then, based on their investment choices, a copycat investor can choose to replicate those investing strategies either in whole or in part.
In most cases, the average investor probably doesn’t have enough capital to keep up with big money managers and institutions in an exact 1:1 ratio. But watching what they buy and sell (and when), and acting accordingly to some degree, is the heart of coattail investing.
While investors used to have to manually follow their favorite investors by searching the SEC website or elsewhere, today, certain online services exist that help to automate the process.
Some brokerages may even offer “mirror investing” services that allow investors to set their own portfolios to make the same exact trades that their favorite investors make, with customized asset allocations.
Who Do Coattail Investors Follow?
When attempting coattail investing, following those who adopt a “buy and hold” strategy could prove beneficial. Because markets move fast, by the time a trade is executed, the most profitable opportunity may have already passed. Buying and holding takes a long-term time horizon or perspective, meaning it could take some of the timing and guesswork out of the equation, making it easier to realize profits.
A copycat investor could choose to copy just about anyone. That said, there are a few choices most commonly used by those who are successful at copycat investing. These include financial professionals and other investors who can influence markets simply by announcing their positions.
Activist Investors
Activist investors are known for causing stocks to rise when they reveal their own investments. These influencers may be ahead of the curve on investment trends, and financial news media reports on the actions of these investors regularly. Activist investors also often publicize their own moves through blog posts or press releases as well. This tends to make it easy for coattail investors to keep up and act accordingly.
Money Managers
People and institutions that manage over $100 million are required to report their holdings to the SEC. The SEC then publishes this information, making it public. Rather than hire a money manager, some copycat investors simply search for investments that large money managers have made and then choose those they think would be best for their own portfolios.
Large Corporations and CEOs
Successful companies that have accumulated cash reserves are challenged with figuring out where to put that money — and coattail investors sometimes follow suit.
For many years, holding cash and bonds was probably the safest option for investors. But bonds and cash have their risks, too, such as interest rate fluctuations and inflation. This has led some companies to look elsewhere for returns, often in the form of alternative investments.
Unlikely Visionaries
Following more nontraditional investors — people outside the financial world who have made successful investments — might not be as profitable as activist investors or proven money managers, but there can still be insight to be gained.
That may include professional athletes or social media influencers. There are numerous examples of both who have made what turned out to be successful investments of various types. Of course, even if you start to mirror an athlete’s or influencer’s portfolio activity, there’s no guarantee that they’ll continue to make wise choices.
While watching athletes or celebrities for investment advice might not be something anyone would recommend, it can bring a unique perspective from outside the echo chamber and herd mentality of those within the financial world. People who come from outside that world tend to have a different outlook and could see something that others miss.
That said, an investor who looks to popular culture icons for investment advice does run the risk of racking up significant losses. It might not be realistic to establish an entire portfolio around this idea. It’s widely believed that in coattail investing, investors should follow only the most esteemed professional money managers.
What Are the Risks of Coattail Investing?
The main risk of copycat investing is that one might end up following an investor who loses, rather than gains. There could also be psychological risks, such as thinking that because one is copying a successful investor’s moves, all personal responsibility has been taken out of the equation.
In reality, investing always comes with risk, and always requires investors to conduct their own due diligence. Unless a copycat investor is using an automated program that buys and sells as soon as a big investor announces their trade, like a robo advisor of one type or another, they will still have to stay on top of their own investments, even if the decisions of what/when to buy/sell are all recommended by someone else.
The Takeaway
Coattail or copycat investing is a strategy that involves mirroring another investor’s market moves. Copycat investing could be pursued in almost any fashion imaginable. It’s possible to follow anyone for investment advice, using their trades as a game plan.
Investors with an interest in pursuing coattail investing would do well to consider sticking to tracking these types of people and their portfolios. But watching others with more experience and preferring to match their actions more often than not can bring a sense of security to some investors. It can also reduce some of the personal responsibility involved in researching investments and trying to decide when to buy or sell.
Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi Invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here).
For a limited time, opening and funding an account gives you the opportunity to win up to $1,000 in the stock of your choice.
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions. SOIN0523048
I am a big believer in making big goals and one of my goals is to purchase 100 rental properties by 2023. I have been a real estate agent and investor for more than 15 years, and I love the income my rental properties provide. Buying 100 rental properties will allow me to retire with more than enough money to reach my current dreams and goals. I do not want to buy 100 properties quickly without concern for the returns or risk. It takes a lot of money, time, and effort to buy 100 properties in the right way. I only buy houses that are well below market value and have great cash flow.
I first wrote this article in 2013, but have tried to update it frequently. I now have 20 rentals that make me over $10,000 a month after expenses. I am way behind on my goal, but many things happened that I could not have predicted like our housing market going crazy. I have bought commercial properties in the last few years instead of residential because they have been better money makers in my market.
Why I made a more challenging goal
In 2010, my original goal was to buy 30 rental properties in ten years. I based that goal on what I thought I could realistically achieve when I started buying rentals. A couple of years ago, I realized my goal was too easy because I knew I could buy 30 houses in ten years. I had given myself no room for improvement in my investing strategies or real estate business! At the start of 2013, I reworked all my goals including my rental property purchase schedule. My new goal was to buy 100 rental properties by January 2023 because it challenged me and would make me work hard. I had no idea when I first made this goal how I could buy 100 rental properties, but that is why we make big goals; to challenge us to do more and to change the way we do things.
[embedded content]
Why real estate?
I want to buy 100 rental properties because of the income and freedom that 100 houses will give me. I make over 15 percent cash on cash returns on my rentals because I purchase them below market value with great rent to value ratios. If I can buy 100 rental properties with the current cash flow requirements I have, I will make a lot of money. According to my calculations, I will be making over $900,000 a year in cash flow, have at least 60 houses paid off, and have over 11 million in equity in my rental properties. Those figures are not adjusted for inflation and assume no appreciation or rent increases. That kind of income should allow me to afford whatever my family and I want and allow us to do whatever we like. We only live once and I want to get everything that I can out of life.
The first part of this article discusses the philosophy behind buying 100 rental properties, why it is important to have big goals, and why it is important to think big. The second half of the article discusses the numbers and a detailed purchase schedule.
Is it possible to purchase 100 rental properties?
To be completely honest, I do not know how I am going to buy 100 rental properties by January 2023. I do not make nearly enough money to buy 9 or 10 houses a year. I have barely been able to buy three houses a year. I bought my first rental property in December 2010, and I started my rental property purchase goal on that day. I should have had three by December 2011, six by December 2012, and nine by December 2013. I started out very slow buying only one rental in my first year. I have picked up speed and as of March 2016, I own 16 rentals, still behind where I had hoped to be. That does not mean I will not reach my goal. The reason I have not purchased as many rentals lately is they are much harder to find in our market. Our prices have increased significantly making it harder to cash flow. I have been buying many more fix and flips since I cannot find rentals.
Why do I think I can purchase 100 rental properties by January 2023 if I am so far away? After reading and listening to books on how to become wealthy I started reworking my life goals. A couple of ideas are repeated in books and audio tapes beginning with Think and Grow Rich by Napoleon Hill. Think and Grow Rich was published in the early 20th century after Napoleon Hill followed Andrew Carnegie for decades. Carnegie was one of the richest men in the history of the world and wanted someone to study rich people in the world and write a book about how and why they became rich. Because Carnegie was one of the richest people in the world, he was able to grant Hill access to most of the world’s wealthiest people. Think and Grow Rich is now known as one of the first self-help books, and many of its basic ideas are still taught today by the world’s most famous life coaches and teachers.
How will my attitude affect my success?
Being positive is a theme that is repeated in every self-help book and audio recording I have ever listened too. I am a strong believer that our attitude has a huge influence on our success in life. The books range from slightly crazy to extremely scientific reasons for how being positive can greatly affect the success we have in our lives. You may have heard of the law of attraction, which states that the universe will return to us whatever we put out. If we are positive and happy, we will get positive and happy things back. If we are negative and sad, negative and sad things will come our way. I am a very logical and scientific person and was not sold on this idea right away. I had to know why this would happen. How could being positive magically bring positive things into our lives?
I started doing research on the brain and on how the law of attraction theory worked. I found out that it is not all magic, there are scientific reasons why the law of attraction works. It is based on the subconscious part of our brain and on how it operates our bodies. We know that our conscious mind is only a fraction of what our brain is responsible for. Our subconscious mind is constantly working to keep us alive by telling our heart, lungs, muscles and the rest of our bodies what to do. Most of our movements and actions are performed by our subconscious, not our conscious mind. We do not have to think about walking, talking, driving, writing, or even most of our daily tasks. By doing those things repeatedly, we have programmed our minds on how to do them.
Tying this back into the positive thinking idea, if we are always thinking positively, our subconscious will think positively, too. If our subconscious thinks we are happy all the time, it will do what it can to make us happy. Why do we care what our subconscious thinks? It is much smarter than our conscious mind. The subconscious is responsible for handling millions of tasks at once, while our conscious mind can only handle a handful of ideas at once. If we let our subconscious know what we want it will help guide our lives and help us to get what we want. Whether it is love, happiness, money, or material items our subconscious has much more power than we think. The theory also states that you must think about what you want, not what you do not want because our subconscious cannot tell the difference. If you are constantly thinking about not having money, then your subconscious will do its best to make that come true as well. If you are constantly thinking of not getting sick, our subconscious will do its best to get you sick. Think of being healthy, think of being rich, and think of the good things, not the negatives.
Why such a big goal?
Almost every self-help book will tell you goals are extremely important. Without goals, we have no direction, no path, and no idea of what we really want in life. There are varying ideas of how our goals should be constructed. Some say we just need broad wide-open goals such as being as happy as possible all the time to make whatever is best for you to come to you. Others say to be as specific and detailed as possible with your goals, break your goals into smaller goals, and then have a period for when those goals will be accomplished. Eventually, you will have a detailed blueprint for how you will get to where you need to go.
Some people say you need realistic goals and others say you need outrageous goals. As you have probably guessed, I like outrageous goals! The reason I like outrageous goals is that they are challenging! If I know that I can reach a goal and if I know exactly how to reach it, where is the motivation for me to push myself? I want goals that make me think and reach for new ideas and systems. I have no idea what opportunities or challenges will face me in the future, so why should I limit my future goals to what I can do now? I may have a huge increase in income or find a new system that allows me to buy houses cheaper. I have such a lofty goal because I have no idea what could happen.
Who will I need help from?
Many of the self-help books also talk about how we all need friends, co-workers, or acquaintances to help us reach our potential. Some use the term mastermind to describe groups of like-minded people who meet to help each other succeed by offering advice and motivation. The idea is that the more people to brainstorm ideas, questions, problems, etc. the better the chance a great idea or solution to a problem will come about. I do not have a mastermind group (this has since changed), but I have recruited my best friend to work with me and learn the real estate business. He was a top-level manager in the corporate world and left his six-figure salary behind to learn real estate from me. I benefit by having a new mind to bounce ideas off and have more help in the office. He benefits by getting out of the corporate grind and learning how to be truly wealthy. He also has a flexible schedule and he is not stuck behind a desk all day.
Why focus is so important
The self-help teachers also say how important it is to focus on one task or goal. All the greats had something in their mind that they really wanted. They did not let anything stop them until they got what they wanted or died trying. I have always thought of myself as being able to multitask, a jack-of-all-trades type of person. So far, it had worked out well, but I know I can do better. I know there are things I can improve in my business to make it run better and make more money. I have always thought that I knew everything about finding good deals in real estate. After starting this blog, I have realized that there is a whole world I have been missing in direct marketing to off-market properties. Instead of trying to manage five different sources of income myself, I need to delegate less important tasks to my staff and focus on the real moneymakers. If I can focus intently on a couple different areas of my work instead of just skimming over 50, I know I can improve my numbers significantly.
Why visualizing the goal being achieved is important
Many great athletes will tell you how important visualization is to succeed in sports. Great golfers visualize exactly how their shot will look before they hit it. Basketball players repeatedly visualize hitting the game-winning shot. The wealth teachers are all huge supporters of visualization. They say visualization will give your subconscious a clear picture of what you want and then your subconscious will do its best to make it happen. If you want to change your life, start visualizing how it should be every day. Better yet, go see, touch, and smell the things you want. Test-drive the car you always wanted, look at your dream home, or immerse yourself with the things you want and your subconscious will get to work. I wrote a ten-year dream story on exactly how I wanted my life to be. I described a beautiful house and in three months, I bought that house. I was not even planning to move and in no way thought I could afford a house like the one I have now, but it became a reality.
Using all I have learned to reach my goals
Based on the ideas I have just discussed, I think I have a good chance of reaching 100 rental properties. I still do not know exactly how it will happen, but I know it will or I will find a better and more challenging goal. I have to train my subconscious to help me reach my goal. I have to be positive all the time. I have to think about my goals constantly and break it down into manageable pieces. I must have help and I have to focus more intently on my important goals. I also have to visualize myself already achieving my goals and having everything I want. Even if not all of this makes me rich, worst-case scenario, I am a positive, determined, focused person who knows exactly what he wants.
Breaking down big goals makes them more realistic
I have broken down other goals in my life, but I have yet to break down a goal this big! I am going to work through the goal while writing the blog and see where I end up in 9.5 years. I wanted to write this article to help convince myself that it is possible to buy 100 properties. The first part of this article was all about my mindset. Now, let us get down to the numbers. Here is a year-by-year breakdown of how I plan to purchase 100 rental properties.
Year one
With my current income, I can purchase three rental properties a year and I have purchased that many in the last three years. I should be able to do a cash-out refinance on at least one rental property in 2014 and get enough money to buy another property. I am also counting on my new attitude and work ideas to create enough extra income to purchase one more rental property. I also just acquired a HELOC on my personal residence for $60,000. I think that will allow me to purchase one more rental. New goal for 2014 is to purchase six long-term rentals.
I will have 15 houses with about $9,400 in monthly cash flow. That is $112,800 a year all going toward paying off mortgages on my properties. I will have paid off one house at the beginning of 2014 and will pay off one and a half more in 2014.
Year two
In 2015, with income and savings, I should be able to purchase four properties. I should be able to do another cash-out refinance and buy another rental property as well. I also believe my continuous improvements will allow more increases in income, through either listing or flipping houses. The increased income will allow me to add another rental and HELOC another as well. I am hoping the addition of my friend beginning to work with me will bring in more income from his real estate activities, which will allow another purchase. My goal for 2015 is to purchase nine rentals.
I will have 24 houses with about $15,200 in monthly cash flow. That is $182,400 a year all going toward paying off mortgages. I will pay off the other half of one property and two more rentals in year two and will have four properties paid off.
Year three
I believe I will increase my income and savings enough to be able to buy five rentals. I will have 24 rentals and I should be able to refinance at least two of those properties. That will allow two more purchases and the HELOC should add the flexibility to add another rental. I am still planning to add to my income every year with increased business. This year I see a big jump in income with my friend being around for his third year and our new marketing and listing techniques taking off. I see three more rental properties being purchased from new income. My goal for 2016 is to purchase 11 rentals.
I will have 35 houses with about with about $22,200 in monthly cash flow. That is $266,400 a year all going to pay off mortgages. I will pay off four and a half more properties for a total of eight and a half properties paid off.
Year four
From my current income, I will be able to buy eight rental properties. I will continue to refinance two properties a year, which will allow at least two more purchases. I am also going to use the HELOC to buy another, and I am still planning to increase my income. I am going to stay conservative and assume enough income to buy one more property this year. My goal for 2017 is to purchase 12 rental properties.
I will have 47 rental properties at this point with about $31,400 in monthly cash flow. That makes $376,800 a year all going to mortgage payoff! I will pay off the half of a mortgage left over from 2016 and five more properties in 2017, making 14 properties paid off.
Year five
From my current income, I will be able to purchase nine rental properties. I will refinance two more properties and use the proceeds to buy two more rentals. I may not have enough money in the HELOC this year so I will not count on that, but I will count on my income increasing enough to purchase one more rental. My goal for 2018 is to purchase 12 rental properties. Note: To buy this many properties I will need about $300,000 in cash for repairs and down payments.
I will have 59 rental properties with a monthly cash flow of $41,000. That makes $492,000 a year all going to mortgage payoff. I will pay off seven and a half more properties in 2018 making 21.5 properties paid off.
Year six
From my current income, I will be able to purchase ten rental properties. I will refinance two more properties and use those proceeds to buy three more rentals. With inflation and appreciation, I should be able to refinance the properties for more money than in previous years. I will not use increased income to buy another property. If my income increases, I will use it for fun stuff such as vacations or cars! My goal for 2019 is to buy 13 rental properties.
I will have 72 rental properties with a monthly cash flow of $51,600. That is $619,200 going toward mortgage payoff. I will pay off the half mortgage from 2018 and nine more properties in 2019 making 31 properties paid off.
Year seven
From my current income, I will be able to buy ten rental properties. I will refinance two more properties and use that money to buy three more rentals. I will not count on any more raises in income since I do not need it at this point. My goal for 2020 is to purchase 13 rental properties.
I will have 85 rental properties with a monthly cash flow of $63,400. That is $760,800 a year going towards mortgage payoff. I will pay off 11 more properties in 2020 making 42 properties paid off.
Year eight
From my current income, I will be able to buy ten rental properties. I will refinance two more properties again and purchase three more rentals with that money. My goal for 2021 is to purchase 13 rental properties.
I will have 98 rental properties with a monthly cash flow of 75,600. I will have $907,200 a year going towards mortgage payoff. I will pay off 14 more properties in 2021 making 56 houses paid off.
Year nine
I only need to buy two more properties to reach my goal! I made it ahead of schedule and when I started writing this article, I was not sure how I would be able to reach 100 properties by 2023. I do not need to refinance any properties at this point and I can start using my income any way I want or I could retire!
I will have 100 rental properties with a monthly income of $82,400. I will have $988,800 a year going to whatever I want it to go to at this point. I can stop paying down mortgages if I want to or I could keep buying properties if I get bored. I came really close to the figures I estimated before writing this article. Falling just short of one million in income from my rental properties (which was more than I thought) and just shy of 60 properties paid off.
Assumptions in my plan to purchase 100 rental properties
You may be wondering how I came up with my figures. To be honest I used very basic figures to make things easy on myself.
I assumed $600 in monthly cash flow per property. I am making between $500 and $700 per property now.
I assumed each mortgage that I paid off would increase monthly cash flow by $400.
I do not assume any inflation because that would cause the numbers to be much more difficult to figure!
I assume my portfolio lender will continue to lend on as many properties as I want. I will have 43 houses financed at one time and then those will start to decrease as I pay them off.
I assume I can continue to do cash-out refinances with my portfolio lenders.
I assume interest rates will not increase significantly.
I assume rental rates will not go up.
Additional benefits of rental properties that my income projections did not account for
Rental properties have great tax advantages, which I discuss here. Every rental property can be depreciated, which will save me thousands in taxes each year. I assume my rental properties will not appreciate, but they have already seen huge appreciation in the last two years, increasing my net worth by $600,000. I assume rents will not increase, but my rents have increased as well over the last couple of years. I rented my first rental property for $1,050 a month in 2011 and it now rents for $1,300 a month. I will most likely be better off than my projections indicate if I can buy 100 rental properties.
Potential roadblocks
These are many assumptions and one or more of them may not work out as I plan. However, other factors may help me do even better than I planned or balance out any roadblocks I run into.
New ways to find properties: I am going to start direct marketing to off-market owners. This should allow me to buy properties even further below market, and I may even find a few owners who will finance down payments. I recently realized I could use my IRA to buy properties!
Private money: One of my goals is to find new sources of private money that will allow me to finance more repairs and down payments. This would allow me to put less money into properties and buy them faster.
New income sources: I have no idea what the future holds as far as opportunities and money. I may find a gold mine that will allow me to buy properties for cash and not have to worry about financing at all!
I assume I will not do anything with the houses I pay off free and clear, but if needed to I could easily get a line of credit or refinance one of these houses to bring in enough money to buy a few new properties.
What will I do in 2023 if I reach my goal?
I have many things I would love to do if I did not have to work. Here is a list of a few of the things I would love to do with one million dollars a year coming in and no job!
Start a pizza restaurant
Start a car dealership
Travel the world with my family
Donate time and money to those less fortunate
Play in the World Series of Poker
Attend a Super Bowl
Play golf all over the world
Buy a Lamborghini Diablo (done!)
Buy a beach house
Help teach others about real estate (doing my best now)
I have a much longer goal list than what is above and I hope to do many of these things before 2023. I know I will have time, money, and the freedom to do these things at that time.
Conclusion
I plan to purchase 100 rental properties by January 2023, but I realize that may not happen. If something better comes along to change my plan, I am ready to embrace fully any new opportunities.
Update on my plan 2014
I have already changed focus slightly in 2014 to fix and flipping over buying long-term rentals. I have done this for two reasons:
There have been more fix and flip opportunities than rental opportunities in my market.
The money from flipping will help me buy more rentals; rentals take a great deal of cash.
It seemed crazy to think I could increase my income enough to buy this many properties when I first made this goal in 2013. However now that it is late 2014, I can easily see myself making more than enough money to buy 100 rental properties and have plenty of money left over to do other fun activities. At some point, I may decide it is better to buy larger multifamily buildings than single-family homes, but for now, I see more opportunity in the single-family market in my area than multifamily.
Update on my plan 2016
The market has gotten even crazier in Colorado. Houses I was buying for $100,000 are now at least $160,000 or more. The rents have not increased nearly as much as house values have increased. It is very hard to find rentals and I have stopped buying them in Colorado. I have started to look at other states including Florida for a new market.
I also stopped paying off my mortgages early. I decided my money was better used to buy as many homes as I could. It has paid off buying 16 rentals in the last five years since our market has gone up so much. I have invested about $300,000 in buying my houses and my equity is close to $1.5 million. I have even decided to sell some of my rentals and re-invest that capital into more properties in another market.
I wrote this goal out in 2013 and updated it in 2014, and it is now 2016. I think goals are vitally important to achieving what you want in life. Will I reach this goal? I do not know. If I don’t reach it, will I be a failure? No! I am already way ahead of where I would have been without this goal. That is the point of goals, to motivate you to go farther than you think you can.
Update on my plan 2018
Right now it is the middle of 2018 and I have not come close to where I should be with my goal. Am I disappointed? No. Many things have happened that are out of my control; good and bad. The biggest challenge I have faced is the housing market in Colorado. Prices have almost tripled since I made this goal. Some of the rentals I bought for less than $100,000 7 years ago are worth close to or more than $300,000 today. I can no longer cash flow on residential rental properties in my market. I have thought about buying rentals in Florida, but in the end, decided to buy commercial properties here. I even bought a 68,000 square foot strip mall this year. I am buying rentals worth a lot of money, but not as many as my plan called for. Sometimes we have to change our plans based on changes in our lives or markets.
I have also focussed more on flips because I can make money with those in my market. I flipped 26 houses last year!
Last Updated on February 25, 2022 by Mark Ferguson
Many people have dreams of making it big as a real estate agent, but they want to start slow as a part-time agent. They want the freedom, income, and other benefits that come with being a real estate agent but are afraid to lose a steady income. Getting a real estate license and working part-time as an agent may seem like a great idea, but it is not easy to pull off.
There are some cases when working part-time may work; like an agent who only uses their license for their own investing strategies. There are also a couple of other instances where being a part-time agent can work if you have a very flexible schedule. The problem with being part-time in real estate is that clients need things done at all times of the day. If you cannot get away from your job, you are going to find yourself struggling to help those clients.
How hard is to become an agent?
One of the drawbacks to becoming a part-time real estate agent is how much work it takes to become a real estate agent. One of my team members just got their real estate license. It can take hundreds of hours of education and testing to become an agent. If you already have a job, even part-time, it will be tough to find the time to complete your education.
There are night classes and online classes that you can take to get your real estate license, but you will have to spend a lot of time studying. The real estate exam is not easy to pass and it will take a lot of time to prepare for it. If you want to become a part-time agent, make sure you factor the time it will take to get your license into the equation.
In Colorado, you will need to take 168 hours of classes either online or in-person to complete the education portion. Once you pass the classes you must take the test, pass the background check, and find a broker to work with. This all takes a lot of time!
If you are interested in getting your real estate license, Real Estate Express offers classes in most states and is very affordable.
Will you have enough time for clients?
Once you get your license, you must hang it with a brokerage. After finding a brokerage, you must start working with clients and generating business. This is where it gets tricky for a part-time agent who has another job. Whether you are listing homes or working with buyers, selling real estate is a random hours job. You may not have to work 40 hours per week, but you will have to work all hours of the day.
If you have a day job, you had better be able to get away from that job to take calls for your real estate job. Buyers are going to want to look at houses and offers must be negotiated and presented. If your clients have to wait eight hours to get a hold of you, they are going to get frustrated. There is a good chance you will lose clients if you cannot get back to them in a timely manner. In a tight sellers’ market such as the one we have now, speed is very important in getting offers accepted. If buyers feel an agent cannot submit offers quickly enough for them, they will probably find another agent. If you cannot respond to your clients for hours at a time, are you being a good agent to them?
You can also check out the video below on part-time agents
[embedded content]
What does a real estate agent do?
Most people think that being an agent is about showing houses and writing offers. However, there is much more to being a real estate agent, and that is why we are paid so much for selling homes. Real estate agents have to do many things to close deals and generate business. Here are some of the things an agent must do in order to be successful:
Show houses
Write contracts
Help buyers complete inspections
Contact lenders
Contact title companies
Contact other agents
Complete continuing education
Host open houses
Talk to your circle of influence
Create brochures
Take photos
Create advertisements
Answer their phone
Floor duty
Create plans and goals
Manage expenses
As you can see, there is a lot that a successful agent must do. Not only do you have to work with clients, but you have to find clients as well. It takes a lot of time to be a great agent and it is very difficult to do part-time. Being able to answer your phone at any time is one of the best ways to get business. If you are returning calls hours after you receive them, there is a great chance that person already has another agent who called them back quicker or answers their phone.
Can you maintain a good reputation as a part-time real estate agent?
As a real estate agent, I deal with other real estate agents, title companies, buyers and sellers, lenders, attorneys, investors, and many people in our community. My reputation is a huge reason why I have been so successful as an agent, broker, and investor. When you are a part-time agent, it is very tough to find enough time in the day to get all your tasks done and follow up with people. If you are calling back people days later or not at all, word will spread very quickly around the real estate community. It is very important to provide great service as a real estate agent and that is tough to do when you only work part-time.
If you get a reputation as someone who is hard to get a hold of, does not call back, or is too busy to follow up, it will be very hard to shake that reputation. Even if you become a full-time agent and do an amazing job, people will remember the less than par work that you did previously. People remember the poor work people do and they expect people to do good work.
I go over everything it takes to become a real estate agent in my book How to Make it Big as a Real Estate Agent. How to get leads, how to find a broker, how much money you can make, how to make money, how to manage your time, and how to avoid the struggles many agents have. It is available on Amazon as a paperback or Kindle, and it is also on audible as an audiobook!
Can joining a team help?
If you want to be a part-time agent and there is no possible way that you can quit your current job, there are some steps you can take to be more successful. I have a team of ten people who help me run my real estate business, fix and flip business, and REO business. We have some part-time help and many members of my team started out as part-time workers. If you join a team, your team can help cover for you when you have to work your other job. By joining a team, you agree to give up part of your commission to the team so the team is motivated to help you succeed. I think there is a better chance of succeeding as a part-time agent if you can join a team rather than trying to do everything yourself.
You will be doing other tasks than just working as an agent, but it will all be real estate related. You will also have a flexible schedule on most teams that will allow you to drop everything and go show houses if needed.
Does it help with investments?
The best situation to become a part-time real estate agent is when you are a real estate investor. I own 20 long-term rentals and I complete 20 to 30 fix and flips per year. I save money when I buy a home from the MLS and when I sell a home because I do not have to pay a listing agent. Being a part-time agent who invests in real estate is well worth it in my opinion.
If you are only an agent to save money on your own properties, you do not have to worry about having a flexible schedule or working leads. If you are only an agent because you are an investor, being a part-time agent may work out great.
What other options will help part-timers succeed?
Joining a team is one way to succeed as a part-timer. There are some other ways to make a part-time real estate career work. The most important thing to have as a real estate agent is availability. Many people do not want to be on-call all the time, but there are sacrifices you must make for an awesome career. While you may not have to work 30 hours per week as an agent or even 20 hours a week to sell houses, you need to be available most of the time. If a buyer or seller needs to talk to you on a Sunday afternoon or on a Monday morning, you should be available. You may have to show houses on the weekends or in the evenings. Real estate agents make their own schedules and have a lot of freedom, but when a client needs to see a house after hours, an agent should accommodate them.
If you want to be a part-time agent and have a very flexible schedule, you have a much better chance of making it. If you have to work another 9 to 5 job every day, it will be very tough to make a real estate career work. There are some amazing jobs today that can help agents make money and have a flexible schedule. Uber or Lyft are ways agents can make money, but also be able to drop everything to help out a client.
Conclusion
A part-time agent can make it in the real estate industry, but to be successful, part-timers need to join a team until they can go full-time. If you are an investor who just wants to save money on your own investment properties, becoming a part-time agent is a great idea.
Many of my sales come from listing REO and HUD homes for banks and for the government. If you want to become an REO agent, you must be a full-time agent. Banks and HUD need immediate responses on their properties and getting back to them in a day or two will not cut it. I have to do inspections within 24 hours and most tasks in 48 hours. To be successful you need to commit and it is tough to commit to something when you are part-time.
2014 was a very exciting year for me and I am looking forward to an even better year in 2015. I had a lot of big real estate goals for 2014, which I discussed in detail here. I did not accomplish all of those goals, but I did accomplish a lot and I know setting goals helped me achieve more than I would have without goals. For 2015 I am continuing to set big goals to push myself to achieve as much as I can. I love writing these articles because it helps me recount what I wanted to do, what I ended up doing and helps me plan the next year.
On the surface it looks like I fell way short on many goals, but when analyzing them it is not as bad as it seems.
My goal articles for other years
What real estate goals did I want to accomplish in 2014?
Here are the major goals I wanted to accomplish in 2014 and what I actually did in 2014.
I wanted to sell 15 fix and flips and I ended up selling 12.
I wanted to sell 300 houses as a team and we ended up selling 160
I wanted to buy 6 rentals and I only bought 3
I wanted InvestFourMore to reach 150,000 views a month and it reached 170,000 in October!
I wanted to buy a Lamborghini Diablo and I did!
As I mentioned I fell short on many goals, but I still sold 12 flips, sold 160 houses, bought 3 rentals and bought a Lamborghini. I think that was a pretty good year, even if it was not quite as good as I hoped.
Fix and flips in 2014
In 2014 I set a huge goal to flip 15 houses; I had previously flipped 10 houses in 2013. Flipping 15 houses takes a lot of work and a lot of planning. I assumed the biggest roadblock to that goal would be finding and buying that many houses to flip. I ended up buying enough houses to flip 15, but I could not find the contractors to do the work. I had to fire one contractor I had worked with for years and I ended up trying out at least four new contractors. I think one of those new contractors has worked out so far out of the four.
I learned a lot about flipping homes in 2014. I learned that having ten flips at one time is not a great way to do business unless you have the contractors to do the work. I will have held a few properties for almost a year and that is way too long on a flip. One of those properties did take about $60,000 in repairs and was an extremely long rehab. A before and after video is below.
[embedded content]
Fix and flip goals for 2015
For 2015 I am not going to be as ambitious on my flipping goals. There are a number of reasons I don’t want to flip 15 houses in 2015.
It takes too much babysitting of contractors and I would need to add at least a couple more.
It takes a lot of capital to fund all those flips and the repairs. I think all the flipping made it harder to buy rentals.
I can still buy as many properties, but instead of flip them myself, I could wholesale the properties.
My goal for 2015 is to flip 10 houses and wholesale 5 to 10 more. I have 8 flips right now so reaching ten should not be a problem, but I might sell a couple I have now as wholesale deals. If anyone is interested in some Northern Colorado deals, let me know!
Rental property goals in 2014
In 2014 I wanted to buy 6 rental properties to keep on track with my plan to purchase 100 rental properties. I only bought three rentals, which was disappointing, but better than not buying any! You can find the details on the properties below:
Rental property number nine
Rental property number ten
Rental property number eleven
These are all great properties and I will make a lot of money with them in the future. I have a total cash flow of about $6,000 a month coming in after I paid off rental property number one early in 2014. There are many reasons why I fell short on this goal as well.
I tied up much of my available capital in my flips
There were very few deals in the area for rentals
It is tough to focus on rental properties when I am also working on flips, my real estate team, and the blog. Plus I have a family that I spend as much time with as I can.
I want to shift much more focus on rental properties again, because they are such a great investment. The income from flipping is great, but I have to pay a lot of taxes on it and once I sell a house it stops making me any money. The rental property income keeps coming in every month with much less work and fewer headaches.
Rental property goals for 2015
For 2015 I want to get back on track buying as many rental properties as I can. I am going to flip fewer homes, which will give me more capital to buy rentals. I am also refining my direct marketing campaign, which should bring me more deals (I will have an upcoming article to discuss my direct marketing). I want to buy at least seven rentals in 2015 and that should put me closer to my goals of 100 rentals by 2023.
Real estate team goals for 2014
in 2014 I wanted to sell 300 homes as a team, but we sold about half that. I had sold over 200 houses in 2013 and 2012, but the market changed drastically. Prices increased, buyers increased and inventory decreased. For many agents, this was a good thing, but I focus on REO and HUD listings and that cut my listings down drastically. Our county went from 10 to 20 foreclosures a week in 2012 to 2-4 a week in 2014. Even though our sales went down drastically we accomplished a lot in 2014.
The team lost a couple of agents in 2014
The team added a couple of agents in 2014
The new agents are doing awesome and selling a lot of homes
Even though we sold less REO and HUD homes, we had many more traditional sales in 2014
The average price of our sales increased by 20%
We had a down year as far as houses sales, but the price per sale was up, our team is much stronger than it was and it is also more balanced. The best part is I have to do less work because I set my team up to be able to complete many of my tasks and sell houses on their own.
Real estate team goals for 2015
For 2015 I want to sell 200 houses, which is a big pullback from my previous goal. REOs and HUDs are even harder to find in 2015 than in 2014, which will decrease our sales. However, the new team members and training we implement should increase the number of sales from the other agents. I also want to add a couple more agents and my goal is to have every agent on my team make $100,000 a year.
InvestFourMore goals in 2014
2014 was a great year for the blog and thanks to setting up my team to handle much of the work I had more time to work on the blog. I wrote over 100 articles on the blog and the traffic peaked at 170,000 views in October. Traffic was down slightly in November and December due to the holidays and I stopped doing as much guest blogging on other sites.
I learned a lot about the internet, marketing, SEO and blogging in 2014. I continue to improve the site and I have met a lot of great people while blogging. The Complete Blueprint has been a great success and adding the conference calls has been very successful. If you missed it, I added CDs, a goals setting guide and a few more features recently. I am working on a system to help real estate agents as well that is almost complete and the REO kit has been very successful as well. My eBooks are doing well, which can be bought on Amazon.
InvestFourMore goals in 2015
In 2015 I want to increase traffic, increase my relationships with other investors and blogs and continue to improve my investing strategies by learning as much as possible. Here are some specific goals:
300,000 views a month by the end of 2015
Implement a new real estate agent success system
Borrow private money through the blog in 2015
Improve or create a new forum for InvestFourMore
Personal goals in 2014
In 2014 I accomplished a huge goal by purchasing a 1999 Lamborghini Diablo. I bought the car much sooner than I was planning on, but a great deal came up on a car that was the perfect color. I did not think I would be able to find that color again for a reasonable price for years so I jumped on it. I also thought Diablo prices were at a low point and I have already been offered $26,000 more than I bought the car for. I am not selling it anytime soon as it is awesome and a great marketing tool as well.
As for other goals I reached some, missed others, but had a great year. My wife and kids are doing great and we love the house we bought in 2013.
Personal goals for 2015
I don’t have any big goals for 2015 as far as car buying. I would love to buy an Aston Martin V8 or Lamborghini Countach at some point, but I don’t plan on doing it in 2015. I have personal income goals and a few more that I will keep private. I can’t share everything!
I hope everyone had a great 2014 and if not, then think of all the things you learned and don’t focus on how bad things went.
I am a huge believer in setting goals to help myself achieve more in life and in business. I love to make big real estate goals that are tough to achieve because I know they will help me accomplish more. Because I set really big goals, I do not always accomplish everything I set out too, but that is okay. I know I am still farther ahead not accomplishing big goals than I would be accomplishing small and easy goals. 2015 was a good year, but not as good as I hoped. I ran into many roadblocks (some of the same as 2014), but I also had many successes. Even though things did not go exactly as I planned, I had a great year, I have big plans for the future and I am going to challenge myself even more in 2016.
My goal articles for other years
Why do I like big real estate goals?
Before I get into exactly what happened and did not happen in 2015, I want to discuss goals. I overlooked goals when I was younger and it was a huge mistake. I thought goals were a waste of time and I never even tried to set any meaningful goals. When my career and life really started to turn around was when I accidentally set some goals as a real estate agent. I wrote out a very detailed plan on how many houses I would have to sell to make what I thought was decent money back in 2005. I gave that plan to my dad, who I was working with at the time to show him how unfair my commission split was. He didn’t change the split I was getting, but I did end up selling that many houses a couple of years later. When I wrote that plan, I thought it was an incredibly ridiculous number (100 houses a year). I know I would not have sold that many houses as a real estate agent if I had not written out that plan, even if it was by accident.
I started to make good money and I realized I wanted to make even more. So I started reading every book I could on goal setting, self-improvement and even “how to get rich”. I even took Jack Canfield coaching, which helped my career tremendously. Along the way, I learned a lot about myself, about habits I needed to have to be successful and how to continuously improve. Many people with life would get easier and are looking forward to a time when they can relax. I learned that challenges are fun, and solving problems is fun. Being bored with no challenges and an easy ride is not fun. I love Jim Rohn’s quote:
“Don’t wish life were easier, wish you were better.”
I started to realize I was in control of my life. If things weren’t going how I wanted them to go, I could change things by changing the way I did things. That may remind you of the saying:
“The definition of insanity is doing the same thing over and over again, but expecting different results.”
Honestly, this saying is one of my biggest pet peeves. First off, many people attribute this saying to Albert Einstein, but there is no record of him ever saying it. Second if this were true, 95 percent of the population would be insane. Sometimes doing the same thing over and over does change the results, if you do the same thing better and better every time you do it. While I think the saying sends a good message about trying new things if something is not working, it still bugs me that it is used so much and wrongly quoted to Eisenstein.
Making big goals is one reason I have accomplished so much. One of my biggest goals is to buy 100 rental properties by 2023. When I first starting buying rental properties I thought a good goal would be to buy 30 properties. I based this goal on my trend of buying 3 properties a year and thought I could continue that trend for ten years. After learning about goals and how to best use them, I knew I had to make my goal bigger. If I knew I could achieve my goal without changing much, I knew my goal was too small. I changed my goal to purchase 100 properties in the next ten years. That goal would challenge me to make more money, find new ways to buy properties or discover other ways to get more properties than I thought I could. While I am a little behind on my plan to reach 100 rentals, I am much farther ahead than my original goal to buy 30 houses.
What were my rental property, fix and flips, team and blog goals for 2015?
2015 rental property goals?
At the end of 2014, I wrote a goal article about what I had accomplished in 2014 and my goals for 2015. Below you will find the goals I set for 2015 and comments on how I did.
I want to get back on track buying as many rental properties as I can. I am going to flip fewer homes, which will give me more capital to buy rentals. I am also refining my direct marketing campaign, which should bring me more deals (I will have an upcoming article to discuss my direct marketing). I want to buy at least seven rentals in 2015 and that should put me closer to my goals of 100 rentals by 2023.
I only bought five rentals in 2015, which was less than my goal, but more than I bought in 2014. However, I am thinking about turning a couple of my flips into rentals, which would put me at my goal. I have one flip that I intended to sell quickly unless the tenants wanted to stay. The home was rented for $1,100 a month and I bought it for about $100,000. The tenants wanted to stay and we just upped their rent to $1,300 a month and they still want to stay. I have not done any work to the property and I think I may try to sell it as-is for $150,000 as with the tenants in place or I might keep it as a rental. My hesitation about keeping it as a rental is the location is a little different from most of my rentals.
I have another flip that I may turn into a rental as well because it is in a great location and could have a basement apartment. If I decide to make those properties rentals I would have met my 2015 goals. In fact, I may have surpassed them if you look at units because both of the new rentals would be 2 unit properties and one of the five other rentals I bought in 2015 was a 2 unit property as well.
To learn how to use mindset and attitude to make yourself more successful, check out: How to Change Your Mindset to Achieve Huge Success: Why your attitude and daily habits have more to do with making more money and having more freedom than anything else. A 200-page book available as an eBook or paperback on Amazon.
2015 fix and flip goals?
For 2015 I am not going to be as ambitious on my flipping goals. My goal for 2015 is to flip 10 houses and wholesale 5 to 10 more. I have 8 flips right now so reaching ten should not be a problem, but I might sell a couple I have now as wholesale deals. If anyone is interested in some Northern Colorado deals, let me know! There are a number of reasons I don’t want to flip 15 houses in 2015.
It takes too much babysitting of contractors and I would need to add at least a couple more.
It takes a lot of capital to fund all those flips and the repairs. I think all the flipping made it harder to buy rentals.
I can still buy as many properties, but instead of flip them myself, I could wholesale the properties.
In 2015 I will flip 9 houses. This is less than the ten I wanted to flip and I should have flipped many more. The biggest problem was I could not get houses fixed fast enough. I even hired a project manager full-time to get things done faster and it has not changed anything. I love flipping houses and I have realized that I am addicted to buying houses. I did wholesale two properties in 2015, which was nice. On both deals, I made close to $20,000 without doing any work at all. I would still be open to wholesaling more properties if the opportunity arises, but those were unique properties. One was in a very small town that was perfect to wholesale because it was 45 minutes away from me and the other was a college rental that needed a ton of work.
2015 real estate team goals?
For 2015 I want my team to sell 200 houses, which is a big pullback from my previous goal. REOs and HUDs are even harder to find in 2015 than in 2014, which will decrease our sales. However, the new team members and training we implement should increase the number of sales from the other agents. I also want to add a couple more agents and my goal is to have every agent on my team make $100,000 a year.
In 2015 we did add two new agents and almost added a couple more to our team. They have just gotten started, but are doing awesome so far. One of my agents that was hired in 2014 made well over $100,000 in his first year, which was awesome. We did not sell 200 houses, we sold 127. That is way below my goal, but our market keeps going crazy. Prices have increased and even though we sold fewer homes, the value of the homes was much higher. HUD homes and REO properties have decreased even more and the sales have shifted from me to my team, which is exactly what I wanted.
2015 goals for InvestFourMore?
For InvestFourMore I want to increase traffic, increase my relationships with other investors and blogs and continue to improve my investing strategies by learning as much as possible. Here are some specific goals:
300,000 views a month by the end of 2015
Implement a new real estate agent success system
Borrow private money through the blog in 2015
Improve or create a new forum for InvestFourMore
InvestFourMore has done awesome and I have the most fun working on it than I do anything else. I did not hit 300,000 views, but I am very close! I have a new source for private money, that was from the blog. I knew the investor before I started the blog, but he approached me about lending money after reading about my business on the site. I created the new forum and it has been a success as well. I also created a new Facebook Group, which has been very successful and you are all welcome to join. I did many more things with the blog, including starting a high-level mentor program (email me if interested: [email protected]).
2015 personal goals for 2015?
I don’t have any big goals for 2015 as far as car buying. I would love to buy an Aston Martin V8 or Lamborghini Countach at some point, but I don’t plan on doing it in 2015. I have personal income goals and a few more that I will keep private. I can’t share everything!
The year was a good one personally and I did not buy any more cars. I did meet a lot of great people and I started a new blog about cars: Howdidyouaffordthatcar.com. I have not had time to do too much with the site yet, but I plan to work on it little by little. I didn’t reach many of my personal goals for income, but I achieved many others I did set.
What are my new goals for 2016?
As you can see, I did not achieve many of my goals for 2016. That may seem like a disappointment, but it is actually a good thing. If I had achieved everything, that would mean I set my goals too low and did not challenge myself enough. I also know there is a lot of room for improvement! Below are my new goals and some things I plan to do to achieve them.
2016 rental property goals?
For 2016 I want to buy 10 more rentals! Yes, that is a huge number, but I think I can do it. Here are a couple of things I am going to change to reach that goal:
I am working on refinancing 8 of my rentals into long-term 30 year fixed rate loans. I am using some national portfolio lenders. I will pay a little higher rate, but have my loans locked in and get $300,000 in cashback. My properties will still cash flow and I will be able to buy many more rentals with that money that cash flow as well.
I am thinking about investing in other markets. I bought a turn-key property in Ohio in 2015, but for future rental property purchases, I want to buy below market value. In order to do that in another market, it will take a lot of work. My reason for switching markets is the huge appreciation we have seen here. It is getting harder and harder to find great cash flow.
I am looking for a new local portfolio lender. My portfolio lender is getting tougher and tougher to work with now that I have hit a certain dollar amount of loans with them. That is one reason I am considering refinancing 8 of my properties with another lender. I would also love to find a lender who does not have a seasoning period, which would allow me to refinance properties faster and get some of my investment back.
fix and flip goals for 2016?
For 2016 I want to flip 20 houses! Yes, this is another huge goal for the new year. This will double the amount of homes I flipped in 2015, but I think it is possible as well. It will be tougher if I decide to keep two of my current flips as rentals. Here is why I think I can make this happen:
I have ten flips going right now. I will get these ten flips sold in the first half of the year. I have two more flips under contract, which would leave me with 12 flips. I only have to buy 8 more, get them repaired and sold before 2016 is over.
I think I can buy and repair that many homes in the next year because I am changing my repair process again. I had a vision in place for 2015, which has not happened. However, I am going to make it happen in 2016 and that may take some big changes in the way repairs are handled.
I may look into more financing options with my flips. I already have a new private money lender who has made the process much easier. While he charges more than my portfolio lender does on my flips, I can close in a couple of days. I may look into adding more private money lenders as well.
real estate team goals for 2016?
For 2016 I want to hire another really good agent. I do not want to hire too many agents, because we don’t have space for many more! I also want to focus on getting leads for our team through our website FergusonGreeley.com. I think we have some great agents in place, we need to get them trained and performing as well as possible, before adding more. Again I want to sell 200 houses in 2016, this goal may seem too high, but one of these years I will get there! How will I meet these goals?
Focus on organic leads through our website, utilizing everything I have learned from InvestFourMore.
Use Facebook to generate leads and sales for our team (we already do this and have had great results).
Weekly training meetings and great support for our agents (we already do this as well).
Flipping more houses will generate more leads and opportunities for our agents.
blog goals for 2016?
For 2016 I want to keep increasing traffic and the number of people I help buy investment properties or make more money as an agent. Here are some goals:
500,000 views a month by the end of 2016. As a site gets bigger and bigger the traffic increase slow down. I still want to grow the site, but I also want to focus on helping people more than getting the biggest audience possible.
Focus on a few core things. With a blog or website, you can get sucked into 1,000 different activities that take a ton of time. I started a podcast in 2015, which has been awesome and should be a core activity, I think my coaching products should be a core activity and writing articles.
I want to write a really awesome book. I have written five eBooks that can be downloaded as a PDF or read as a Kindle eBook. I think the books are good, but I want to write an awesome book. I have already started writing an extremely in-depth book on rental properties that will be available as an eBook and a physical book that can be ordered and delivered to your door. I want this book to be the best rental property book available. I am also working on a book that I am co-writing with J Scott.
personal goals for 2016?
I don’t disclose what I make or how much I want to make on the blog because I try to keep at least a few things private! I do have personal income goals, business goals, and many other personal goals. Here are some long-term goals I added to my bucket list. I don’t have dates yet for when I want to accomplish these, but I am working on that.
Buy an old plantation and fix it up. I love old houses and old mansions. At some point in my life, I would love to buy an old plantation house and fix it up.
Start a used car dealership. I have already looked into starting a car dealership so that I can buy more exotic cars. I love cars and my dream job would be to buy awesome cars all day long, selling them is tougher for me. I met some really cool people this last year, including some guys who started a car dealership.
I want to buy a 1980’s Aston Martin V-8 in 2016. Prices on these cars are going up and I want to buy one before they skyrocket as my Diablo has.
Conclusion
Over the last year, I have learned a lot, changed the ways I do business and had a lot of fun. I think I can improve things immensely in 2016. One reason I think I can improve things is because of my personal habits and routines. I learned many things over the years about success and once you reach some level of success it is easy to slack off. I did slack off on my daily routines, goal reviews and personal improvement over the last year. I have made a huge effort to get those habits back on track in the last three months. I am really excited to get things started in 2016 and see what happens!
Save more, spend smarter, and make your money go further
When it comes to the active vs. passive investing debate, to me, it’s a no-brainer: I’m a passive guy.
My entire portfolio consists of a couple of broad-market stock index funds and a bond fund. I don’t own any individual stocks and zero funds that try to beat the market. I stay invested in good times and bad and I ignore my portfolio as much as possible, except for annual rebalancing. (In practice, this means I look at it once a week. Thanks a lot, Mint.)
I invest this way not (just) because I’m lazy, but because I believe the evidence is overwhelming that a passive approach will outperform the vast majority of active investing strategies over time. Yes, over any given period, some active funds will outperform by a little and a select few will outperform by a lot — they’ll sail through a bear market smelling like honey.
Unfortunately, it’s impossible to know ahead of time which will be the winning funds and you might end up selecting one of the big losers. Oh, and index funds cost less. That means more money for me and less for a money manager.
As Rick Ferri puts it in his book The Power of Passive Investing, “There’s only a low probability that any fund will achieve superior returns. While it’s possible, it’s not probable.”
Or take it from author Bill Bernstein: “The debate between active and passive management is like the debate between astrology and astronomy,” he said in a recent interview.
As you can tell, I’m convinced of the superiority of index funds and passive investing to the point of smugness, so I thought it would be good for me to talk with someone who fundamentally disagrees. Jerry Webman is the chief economist at OppenheimerFunds and author of the new investing guide MoneyShift: How to Prosper from What You Can’t Control. He dedicates an entire chapter of his new book to building an intelligent argument against my style of investing, and the book is witty and engaging.
Webman and I didn’t have time to hash out the entire classic active/passive investing debate, so I wanted to focus on one of his favorite topics: emerging markets. These markets now account for about one-quarter of the stock market wealth outside the U.S., and we both agree that it’s important for a portfolio to own stocks from emerging economies like Brazil, India, and China. We disagree about the best way to do it, though.
An emerging discussion
MoneyShift argues that most investors, including index fund investors, are missing out on buying opportunities in emerging markets. “Emerging markets is one of the places where it’s easiest to make the case for bottom-up active management,” Webman told me. “You really do have many companies that are not carefully followed, maybe not well-understood, and a careful manager takes the time to figure out what the real market for the company is, and how they fit with the regulatory environment in which they have to work, which might not be fully evolved.”
“It would be foolish to surrender the emerging markets portion of your portfolio to a dumb index fund,” Webman argued. “I want somebody who’s taking a really careful look at it,” he said. “There’s a lot more value to be added by someone who’ll go and do the research in less-understood and less-invested markets.”
To put it another way, it’s hard to learn anything new about an S&P 500 company. Those are the 500 biggest U.S. companies — everyone has heard of them and thousands of analysts scrutinize them all day long.
But who’s keeping an eye on, say, the Peruvian stock market? One manager who takes the time to understand Peru and how to read annual reports from its companies might be able to make a ton of money from insights that would be totally lost on a U.S. stock analyst.
This argument seems intuitively correct. However, I remembered the same argument being made about investing in small companies (aka: “small-caps”) in the United States: the market was less efficient, there was less public information about the companies and the stocks traded less heavily, which meant more opportunities for active managers to make money.
But it didn’t actually work out that way. As Standard & Poor’s put it, “over the last decade, SPIVA has consistently shown that indexing works as well for U.S. small-caps as it does for U.S. large-caps.” SPIVA is Standard & Poor’s Indices vs Active Funds scorecard, which twice a year compares the performance of passive index funds with actively managed funds.
More on that in a moment…
Webman said there are important differences between U.S. small-caps and emerging market companies: In the US, “you do have financial reporting that’s well-established. You have good protection for minority shareholders and you have all of the things that you might not have in an emerging market company.”
I wondered whether SPIVA could help answer this question: in emerging markets, is it better to own a dumb passive index fund that buys all the companies it can, good and bad, or to turn your money over to an expert manager who carefully researches and selects the best companies from each country?
The answer
Well, it’s not even close. Over the five-year period ending in December 2011, only 17% of actively managed emerging markets funds outperformed their benchmark index. Since an index fund hugs the benchmark index as closely as possible, buying the index fund would have put you near the top of the heap. This is typical: it’s difficult to find any five-year period in any investment category where the index fund didn’t trounce most of the competition.
Webman is skeptical of this kind of raw statistical analysis. “I worry about looking at averages,” he said. “It turns out a lot of so-called active managers aren’t so active. And it does look like results are better for active managers who really actively manage their portfolios.” He added that just looking at the number of funds that outperformed doesn’t tell you how much money outperformed. Maybe those few winning funds are actually the biggest funds, which means the average active investor is doing just fine.
Again, this argument sounds reasonable: who cares if most funds don’t beat the index? As long as I can identify a fund that will, I’m golden.
Unfortunately, there’s no evidence that there’s any way to identify the best performers ahead of time, aside from sheer luck. SPIVA also measures performance persistence and the results are appalling. “Very few funds manage to repeat top-half or top-quartile performance consistently,” says the report, which some consider an understatement. For example, in U.S. small-cap funds, less than 4% of funds stayed in the top category five years in a row. They didn’t look at emerging markets funds, but there’s no reason to expect a different result.
High bias
Let’s stipulate that everyone involved in this conversation is biased. Jerry Webman is an executive at a Wall Street firm that sells actively managed mutual funds, S&P is in the business of selling indexes, and I have my life savings in passively managed index funds and am unlikely to go out dragging the river for convincing evidence that I’m investing like an idiot.
If you think Webman is right and I’m wrong, however, I’d like to hear about it.
And let me give Webman the last word: “I think what makes markets is, we’re all going to look at several different kinds of conflicting evidence and come to different conclusions.” I couldn’t agree more.
Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.
Save more, spend smarter, and make your money go further
Previous Post
Space X: The Final Frontier of Investing
Next Post
Is the Show Over for the BRIC Economies?
Day traders may hold stocks for a few hours, while buy-and-hold investors may hold onto a stock for decades. There is no single formula that works for everyone when it comes to deciding how long to hold stocks.
Rather, the decision to hold stocks or sell them must include a number of factors that may be unique to each investor. These can include everything from company fundamentals to industry trends to the investor’s own goals.
In a perfect world, an investor would hold onto stocks until they made a profit. But how much of a gain, and how long that might take — and what to do if the stock loses value? — is more complicated than it seems. Here are some variables to consider.
Why Hold Onto Stocks for the Long Term?
Here are some reasons for an investor to hold on to a stock: They only feel compelled to sell it because of that stock’s most recent performance in the markets. But selling a stock because of a sudden drop in value could be considered timing the market — a strategy that, at times, can hurt investors.
What happens today in the markets doesn’t necessarily reflect longer trends, therefore holding onto stocks despite a dip may give your shares time to recover.
A study done by Dalbar illustrates how investors who attempt to time the market often turn into their own worst enemies. During the 20-year period studied, the S&P 500 had an average annual return of approximately 10%. During the same time period, the average investor achieved a return of just 2.5%, due to the frequent changing of their investment holdings (often mutual funds).
Sure, in the moment, it can be tempting to sell a stock based on a dramatic price change. But, calculating stock profit or loss alone may not be particularly helpful. Stocks that enjoy long-term growth take on some dips in price. And, similarly, dud stocks may have some brief moments in the sun.
Buying and Holding for the Long Game
What’s the ideal holding period for a stock? Some investors might say forever. (Or, at least until the money is needed — like, for income when you’ve reached your target retirement date.)
There are several allures of holding stocks for a long time. First, spending ample time in the market reduces the risk of short-term market volatility. Ups and downs in value are an inevitable part of investing in the stock market, whether through a single stock or a fund. Especially in the short-term, the market could move in any direction.
The bear market between 2007 and 2009 was a prime example of this, as the U.S. stock market lost more than 50% of its value then. This wasn’t an ideal time to be holding stocks — but it was an even worse time to sell. With a buy-and-hold strategy, investors can keep their eyes fixed on the potential for a recovery. The stock market hasn’t yet experienced a dip that it did not bounce back from.
What Is Index Investing?
This is why some investors prefer passive investing strategies. Index funds hold a representative sample of the entire stock market, in an attempt to achieve the market’s average returns. Instead of betting on just one company stock’s performance, index funds invest in the entire engine of the economy. Research has shown that over time, market returns may exceed the returns of active strategies.
Since the great recession of 2008, the stock market has more than made back its losses. This is why buy-and-hold is a strategy that is popular with index fund investors.
Holding Stocks for Future Profitability
Let’s say that a company’s stock has performed well. Perhaps, it’s even hit an investor’s profitability target. Is growth, alone, a good reason to sell? Some investors might think no.
At any moment in time, what makes an investment worth holding on to is the belief that it will be profitable in the future. Therefore, what has happened in the recent past may or may not be relevant to the future.
In investing parlance, this notion is called fundamental analysis. Here are just a few big factors that an investor might chew on when adopting this type of market analysis:
An investor wants to hold on to the stock of a company that continues to increase its sales over time, with a forward-looking forecast that indicates growth. Perhaps the company continues to beat Wall Street’s expectations on earnings.
Maybe, the company has strong management that continues to improve profit margins without sacrificing innovation. Or, perhaps the company continues to develop products that increasingly capture market share, making the company a stronger industry competitor.
While none of the above scenarios outright guarantee a company’s stock will continue to perform well into the future, keeping an eye trained to the days ahead — instead of the past — may be a useful skill for investors to develop.
Best Investment App of 2022
– Motley Fool
Trade stocks, ETFs, and crypto – or start an IRA.Get up to $1k when you fund an account today.
**Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions.
Reasons to Sell Stocks
Some investors and traders, however, are not interested in long-term holding strategies. Instead, they set certain profit thresholds, selling once those requirements are met.
Selling Once a Stock Hits a Profit Requirement
Here’s one scenario:
A trader may want to sell once a stock reaches 10% or 20% in profit. Similarly, a stock could be sold once it hits a preselected price target — usually based on a stock’s per-share price. Price-target selling can be set up automatically, through what’s called a limit order.
For example, an investor buys a stock for $50. They want to sell this stock if (and only if) the price reaches $65. A limit order can be set to sell when the stock hits this target price. If it never reaches $65, then order is not filled (and the stock remains held).
Selling for Personal Reasons
Although it is not, generally, recommended that an investment strategy change in response to the market’s ups and downs, there are plenty of personal reasons why a person may opt to sell stock investments.
Certain life events may create a shift in an investor’s ability to tolerate the risk of stocks. For instance, a divorce, family death, the birth of a child, or a big move may cause a person to want to keep more of their overall investment portfolio in easy-to-access cash (or other less volatile investments).
Similarly, a person might just want to build up their cash savings. For financial goals with a more immediate timeline, it may make little sense to subject that money to the volatility of the stock market. Instead, savers may prefer to sell stocks to keep that money liquid and ready to be used.
Changes in personal investment strategy can also drive an individual to sell stocks. Shifts along these lines may have nothing to do with a stock’s recent performance or that of the market. Investors approaching retirement, for example, could want to shift towards more conservative investments, like cash or bond holdings.
Selling to Diversify Assets
Many investors opt to put a mix of stocks, bonds, and cash in their long-term investment portfolios. For example, an investor may choose a mix of 70% stocks and 30% bonds to balance out investment goals and risk tolerance.
But, when diversifying assets, one type of investment may outperform the other. Because of the potential for this uneven growth, an investor’s asset allocation could get thrown out of balance.
Let’s imagine a large spurt of growth in the stock market coupled with more lackluster growth in the bond market. Remember the investor from above, with a 70/30 mix? Maybe, now. they’re left with a portfolio that’s closer to 80% stocks and 20% bonds.
That mix may carry more risk than the investor deems appropriate. So, in this scenario, rebalancing the portfolio requires selling some stock holdings and then moving the funds into less volatile bonds.
Understanding Short-Term Holdings
Investors debating how long to hold their stocks will likely want to consider taxes. There’s no minimum amount of time when an investor needs to hold on to stock.
But, investments that are sold at a gain are taxed at a capital gains tax rate. This rate changes, depending on whether the investor held onto the stock for more or less than one year.
For a holding period of less than one year, any gains will be taxed at a person’s marginal income tax rate. By holding onto a stock for more than one year, an investor will likely lower their tax burden. It can be helpful for investors to speak with a certified tax professional before adopting any tax strategy.
The Takeaway
Even though investors typically put a great deal of thought into selecting stocks and other securities, with the hope that those securities will appreciate in value, there is no guarantee they will. And there is no crystal ball that can tell any investor how long to hold onto a stock.
Sometimes it’s the stock itself that determines how long you’ll hold it. But sometimes your investing strategy determines your stock selection. If you’re planning to sell quickly with a gain in mind, that’s one approach. But if you expect to hold onto a stock for the long haul, that can also influence which stocks you think have staying power.
Ready to invest in your goals? It’s easy to get started when you open an Active Invest account with SoFi invest. You can invest in stocks, exchange-traded funds (ETFs), and more. SoFi doesn’t charge commissions, but other fees apply (full fee disclosure here), and members can access complimentary financial advice from a professional.
For a limited time, opening and funding an account gives you the opportunity to win up to $1,000 in the stock of your choice.
SoFi Invest® The information provided is not meant to provide investment or financial advice. Also, past performance is no guarantee of future results. Investment decisions should be based on an individual’s specific financial needs, goals, and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below. 1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC registered investment advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal.
Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or prequalification for any loan product offered by SoFi Bank, N.A. Investment Risk: Diversification can help reduce some investment risk. It cannot guarantee profit, or fully protect in a down market. Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances. Claw Promotion: Customer must fund their Active Invest account with at least $10 within 30 days of opening the account. Probability of customer receiving $1,000 is 0.028%. See full terms and conditions. SOIN0323027
Motif Investing is a great way to invest in bundles of stocks, while saving on commissions and fees. Now they’re also offering a $150 bonus for new accounts.