[GregWeld]

Excellent article.

What the underlying message is saying is that you don't need to gamble on the get rich quick stocks everyone talks about... You can get quite rich INVESTING in great companies with long histories of good earnings and dividends. The key difference - you can bet the farm (and loose the farm) trying to be an instant millionaire - or you can grow your money over a long period and get there.

What I've tried to show people is that once you have a proper amount invested in the right stuff -- and it's spinning off income/returns.... THEN you can afford to take a flier once in awhile and maybe hit a double or triple in the fast lane. But you have to build that base first!


I'm going to put a half a million into another apartment complex LLC... These types of investments are illiquid... You have no control over your capital... You can't just make a call and pull your money out. The reason I can do these is because I don't/won't need the money for anything. The group I invest with and have invested with for many years thinks like I do. We go in - buy right - put 45 to 50% down - get fixed financing - and have a pool of capital established to immediately upgrade the properties - thus also increase rental rates. These spin off nice cash flow and depreciation (a nice tax benefit) - and the last one I did returned 117% on capital in 4 years (sold it).

It's the above types of investments why people say the rich get richer. It's true. But you have to have that base of good investments FIRST - because if not - and you put your money into a rental house - or some illiquid investment - you'll stand a chance of losing it because in a year or two or three you'll have an emergency and need the money - and someone will cash you out it, but only at a steep discount... But if you have other liquidity - stocks etc - then you have wiggle room.

So that's why people need to be diversified and liquid until they reach a point where they can branch out and take on other types of investments.