According to Biblical accounts, the 40 year reign of King Solomon saw unparalleled prosperity for the kingdom of Israel – due, many believe, to the King’s great wisdom and judgment in the management of his realm. “Blessed is the man who findeth wisdom and is rich in prudence,” he says in Proverbs 3:3. And in investing as well as in running a kingdom, prudent planning yields profitable outcomes.
That’s the message in the fourth of Jason Hartman’s 10 Commandments for Successful Investing: “Thou shalt use prudent financial planning techniques.” Though the notion of prudence may seem a relic of King Solomon’s day, that combination of knowledge and caution creates a solid framework for success in real estate investing.
Prudent financial planning, in real estate as in other areas, establishes a road map for a long journey, not a quick jaunt. It begins with knowledge – of yourself, your current situation, and your goals. Knowing your own personality creates the foundation for any kind of plan. Where do you fall on the spectrum of instant versus delayed gratification? How long are you willing to wait for outcomes?
Another consideration is tolerance of risk and need for security. How much are you willing to gamble on the outcome of your investment? Planning your investments also includes outlining goals for your investing activities – some income to supplement a pension in retirement, freedom from the working world, amassing wealth? These things are essential for getting the most out of working with a qualified financial counselor – another aspect of “prudential financial planning.”
Prudent planning also involves understanding yourself and your style of dealing with the world in general. Are you risk-averse or risk-tolerant? Do you need instant gratification, or can you accept the long-term commitment involved in profiting from rental real estate? As Jason Hartman points out, some risky investments can yield quick cash but have no staying power for long-term wealth building.
Investments in rental real estate offer returns over time, and stability from an asset that everybody needs: a place to live. Taking Jason Hartman’s prudent approach to investing in property is based on knowledge – of yourself, your goals, and the available options – combined with a long term vision and the help of a professional who can help you make those goals a reality. King Solomon’s wealth arose from the King’s willingness to exercise wisdom and prudence. And for modern investors, those concepts still hold the key to long-term investing success. (Top image: Flickr | BalajiB)
The Solomon Success Team